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In a development that is likely to be welcomed by air travelers, as many as 18 underserved cities are set to figure on India’s aviation map from January, with the government expecting airlines to submit proposals to fly on various routes to and from these cities under the Regional Connectivity Scheme (RCS), also known as UDAN or Ude Desh Ka Aam Nagrik.
Subsidised air travel of Rs 2,500 per ticket on one-hour flight will be a reality on routes such as Jamnagar-Ahmedabad, Bhavnagar-Ahmedabad, Jamnagar-Bhavnagar, Gwalior-Allahabad, Gwalior-Delhi, Diu-Ahmedabad, Puducherry-Chennai, Agra-Allahabad, Agra-Delhi and Allahabad-Gorakhpur, among others. This is an indicative list of routes, which will be finalized depending upon the bids received from the airlines.
“We have shortlisted a total of 18 underserved airports, where less than seven flights are working in a week. RCS flights from these airports can be started in January,” a civil aviation ministry official said. The government has already invited airlines to submit their proposals with regard to routes and networks connecting any one of the RCS airport to a major airport, or for a pair of two RCS airports.
Jamanagar and Bhavnagar in Gujarat, Pantnagar in Uttarakhand, Gwalior in Madhya Pradesh, Diu in Daman and Diu, Kadapa in Andhra Pradesh, Jorhat and Tezpur in Assam, Agra, Allahabad and Gorakhpur in Uttar Pradesh are among the 18 airports for which airlines have been invited to submit bids.
The airfare cap fixed by the government for these routes varies from Rs 1,420 per seat (for flight covering distance of 151-175 km) to maximum of Rs 3,500 per seat (for a flight covering distance of 800 km) for airlines using fixed-wing aircraft.
For a one-hour flight covering roughly 476-525 km of distance, the government has put the fare cap of Rs 2,500 per seat. The cap on air fares on RCS routes will be reviewed periodically based on inflation rate, price of aviation turbine fuel and foreign exchange rate.
The government will provide airlines viability gap funding (VGF) as well as a slew of tax benefits and concessions to enable them to offer flights on these routes at subsidised rates.
“While the government has provided a tentative list of RCS airports, it is for the airline to decide on the origin and destination airports proposed to be connected through the RCS Route,” the official said.
An applicant may submit an initial proposal for either one-way connectivity (a route) or to-and-fro connectivity (two routes) between two airports. Airlines can also submit a network proposal, to connect a minimum of three and up to a maximum of seven distinct airports.
As per the RCS policy released last month, the number of RCS flights to be operated in a week with VGF shall be a minimum of three and a maximum of seven departures per week from the same RCS airport. The VGF will be funded through a levy on every departure flight on major routes.
State-owned company MSTC Ltd has been entrusted with the task on inviting applications and conducting bids online. The government expects the proposals to come by early December, post which counter proposals will be invited from competing applicant. An Evaluation Committee will then finalise the selected candidates by December-end.
Apart from VGF, the Centre will support the scheme by keeping the rate of excise duty levied on jet fuel bought from regional airports at just 2 per cent against, which is significantly lower than the 14 per cent charged across all other airports.
The government will also give a service tax exemption on 90 per cent of the taxable value of tickets of flights for one year. States that join the scheme will levy value added tax on jet fuel at the rate of just 1 per cent or less at airports falling under the scheme.