Millennium Post

UDAN scheme: Get ready to fork out more for air tickets

Flyers will soon have to shell out more for air travel with the government’s decision to levy up to Rs 8,500 per flight on major routes to fund its regional connectivity scheme that seeks to make flying more affordable for the masses.

The levy, effective December 1, will 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 scheme – UDAN (Ude Desh ka Aam Naagrik) – seeks to connect small cities by air as well as make flying more affordable for the common man by way of capping fares at Rs 2,500 for one-hour flights under it.

Civil Aviation Secretary R N Choubey on Friday said the levy will be up to Rs 8,500 per flight depending on distance flown.

“The levy for an up to 1,000 kilometre length of scheduled flight will 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,” Choubey said here.

It will be applicable only on scheduled domestic flights operating on major routes and excludes regional flights, he said.

For UDAN, the government has created the Regional Connectivity Fund (RCF) – which will be 80 per cent financed by the Centre and the rest by respective states.

With the levy, the government estimates to have Rs 400 crore for RCF, Choubey said. “On top of it, another 20 per cent (funding) will come from state governments. 

We are roughly looking at around Rs 500 crore per year available in the kitty,” he said. Choubey was speaking at a stakeholders’ conference and pre-bid meeting on implementation of UDAN, whose final contours were unveiled last month.

To provide viability gap funding for the flights operated under UDAN, the ministry will charge the levy from airlines on every departure on major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

The levy will push air fares slightly higher as airlines are expected to pass on the burden to flyers.
However, Choubey said that even if the levy burden is passed on to the customers, the air fares will not go up significantly. 

Stating that the levy will come into effect from December 1, 2016, Choubey said “even if it (levy) is being passed on entirely by airlines without any quantum being absorbed by them (airlines), it (the increase in airfares) should not be more than, let’s say, one per cent (of a ticket price). That is the 
ballpark figure”.
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