Follow Us:
Monday, March 30, 2020

Government mulls higher VGF for planes with less than 20 seats

Fares would be capped at Rs 2,500 for one-hour flights.

By: PTI | New Delhi | Published: November 27, 2016 2:16:09 pm

Government plans to provide as much as 30 per cent more viability gap funding for sub-20 seater planes flying to unserved and under-served airports under the regional connectivity scheme. Seeking to make flying affordable for the masses, the government has launched UDAN (Ude Desh Ka Aam Naagrik) scheme under which fares would be capped at a maximum of Rs 3,500 depending on the duration of a flight on regional routes. Fares would be capped at Rs 2,500 for one-hour flights.

Watch what else is making news:

To compensate the operators, the Civil Aviation Ministry would be providing viability gap funding — which would be partly raised by way of a fixed levy on planes flying in major routes.

While the amount of funding would primarily depend on different stage length (or duration) of the flight, the ministry would also take into account certain constant factors in deciding the quantum.

“Now we will have two constants for the same stage length,” Civil Aviation Secretary R N Choubey told PTI.

While unveiling UDAN scheme last month, the ministry had said viability gap funding (VGF) would be based on different stage lengths as well as the type of fixed wing aircraft.

“For the aircraft that are comparatively bigger ones such as ATRs, the VGF will be same what we have indicated earlier. But for the aircraft which have less than 20 seats, the VGF will be significantly more,” Choubey said.

When asked about the quantum of increase in VGF that would be available for such planes, he said “it may be about 30 per cent higher than the VGF for an ATR”.

The idea of providing higher subsidy for aircraft with less than 20 seats was suggested during a stakeholders conference/pre-bidding meeting on UDAN organised by the ministry earlier this month, Choubey said.

“We are going to put it (framework in this regard) out soon,” he added. Under UDAN scheme, the ministry has listed three categories of aircraft — those having less than 20 seats, 21-80-seaters, and 80 seats or more.

It has already announced its decision to levy up to Rs 8,500 per flight on major routes to fund its regional connectivity scheme from December 1.

The levy for an up to 1,000 kilometre length of scheduled flight would be Rs 7,500 per flight, Rs 8,000 for a 1,000-1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre.

It would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.