Millennium Post

UDAN: Airfares to be revised every three months depending on inflationary trends

UDAN: Airfares to be revised every three months depending on inflationary trends
Airfares as well as the government subsidy for airlines under the regional air connectivity scheme will be revised every three months depending on inflationary trends.

The scheme – UDAN (Ude Desh ka Aam Naagrik) –provides for cap on air ticket prices and viability gap funding (VGF) for the participating carriers.

The Civil Aviation Ministry has said caps on air ticket prices and VGF under the scheme would be revised on a quarterly basis.

While airfares would be linked to inflation, VGF would be decided after taking into consideration inflation, cost of aviation turbine fuel and the rupee-dollar exchange rate.

UDAN, that seeks to connect un-served and under-served airports as well as make flying more affordable, kicked off with the first flight taking off last month from Shimla to the national capital.

"Both airfare and VGF caps will be revised on a quarterly basis.

"While the airfare cap will be indexed to inflation, the VGF caps as well as VGF amounts determined for specific routes will be indexed to ATF prices and exchange rate of INR vis-a- vis $in addition to inflation," the Ministry said.

The clarification has been provided by way of a set of Frequently Asked Questions (FAQs) about the scheme. The quarterly revision would "ensure that all the factors that impact the cost of operations of an airline are taken into consideration while determining VGF".

Airline operators who have been granted routes under the scheme need to set aside 50 per cent of the aircraft capacity for discounted fares. Under UDAN, air ticket prices are capped at Rs 2,500 per hour and for keeping the fares low for select number of seats, subsidy would be extended to the participating carriers in the form of VGF apart from other incentives.

Last month, Air India's subsidiary Alliance Air launched the first RCS flight on the Delhi-Shimla-Delhi route. Five airlines won bids to operate on 128 routes connecting 70 airports, of which 31 are un-served under UDAN.

The government is likely to carry out bidding for the second phase of RCS within the next three months.

Air India Express eyes tie-up with flydubai

New Delhi: Air India Express is in discussions with Dubai-based flydubai for collaboration opportunities, including code share among their flights.

The move comes at a time when AI Express, which operates a significant number of flights to Gulf nations, is working on ways to spread its wings further.
Part of the Air India group, the carrier has plans to fly to new destinations.

An official said the airline is discussing ways to collaborate with flydubai for possible sales and marketing beyond Dubai.

Various options, including code share of flights and interline agreement, are being looked at, the official added.

Code share and interline pacts provide for smooth connectivity between multiple flights. When contacted, a flydubai spokesperson said India is a very important market for the airline.

"We are always looking at new opportunities in the market to facilitate travel between India and Dubai," the spokesperson said in a e-mailed statement.

AI Express flies to 14 international destinations, including Dubai, Sharjah, Abu Dhabi, Bahrain, Doha, Kuwait, Salalah, Singapore, Kuala Lumpur, Riyadh and Dhaka.

Besides, it has domestic services on various routes.



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