Regional Connectivity Scheme: Centre plans to bid out routes to participating airlines this month

The Ministry of Civil Aviation will unveil the final RCS policy by mid-October.

Written by Sunny Verma | New Delhi | Published:October 3, 2016 1:50 am
aviation industry, Regional Connectivity Scheme, domestic flights levy, india domestic flight taxes, air tickets, air ticket capping, flight fares, flight fares capping, 2016 civil aviation policy, aviation news, business news, india news, latest news Centre has suggested the states to provide incentives to airlines to encourage them to fly on regional routes.

In order to ensure that the first flight under the Regional Connectivity Scheme (RCS) takes off from January next year, the government plans to bid out the routes to participating airlines later this month. The Ministry of Civil Aviation will unveil the final RCS policy by mid-October after which it will invite bids from the airlines wanting to fly on regional routes, civil aviation secretary Rajiv Nayan Choubey said.

The bids for routes will be on “reverse auction” basis, he told The Indian Express. This means an airline quoting the lowest amount of subsidy would get the right to fly on a particular route. Apart from bidding out a pair of routes, the government will also auction a network of routes. The Centre has already signed memorandum of understanding with states including Gujarat, Maharashtra and Chhattisgarh among other for the RCS. It signed an MoU with Puducherry on Friday for implementing RCS in the state.

The Centre has proposed to cap fares at Rs 2,500 for a one-hour flight under the RCS. Airlines operating under the RCS will get viability gap funding and a host of other benefits such as lowers taxes and airport charges to promote regional connectivity. The government has already notified setting up of a Regional Air Connectivity Fund for providing viability gap funding to aircraft operators. The Centre will share 80 per cent of the cost of viability gap funding while the states will share the remaining 20 per cent.

The civil aviation ministry has also proposed a levy on all domestic and international flights on metro routes, the collections from which will go into the regional connectivity fund. The government will exempt service tax on tickets on RCS routes, and remove excise duty on ATF drawn by airlines.

Airports Authority of India, which is the implementing agency for the scheme, has already shortlisted 22 underserved and unserved airports, which are suitable for RCS flights. These airports include Bikaner, Jaisalmer, Warangal, Bhatinda, Pathankot, Jamnagar, Gwalior, Agra and Allahabad among others. There are a total of 394 unserved airports and airstrips across the country.Centre has suggested the states to provide incentives to airlines to encourage them to fly on regional routes. The government has released the draft RCS in July, which also proposed to period of exclusivity on routes won by an airline during the auction. This was to ensure that the scheme is viable from a commercial viewpoint.

Centre has suggested the states to provide incentives to airlines to encourage them to fly on regional routes. The government has released the draft RCS in July, which also proposed to period of exclusivity on routes won by an airline during the auction. This was to ensure that the scheme is viable from a commercial viewpoint.