A cess of Rs 40-50 per departing domestic passenger may be levied by the Union Ministry of Civil Aviation to part-fund connectivity to remote towns and cities soon. The Ministry is actively considering doing away with the present route dispersal guidelines, which require scheduled airlines to deploy at least 10 per cent capacity on routes which are otherwise not lucrative and connect remote areas, smaller towns and cities.
Instead, it is examining a proposal to put such non-lucrative routes up for bidding while offering a subsidy for airlines to operate flights on such routes. According to a report on ‘Promotion of Regional and Remote Area Air Connectivity in India’ which Deloitte has prepared on instructions of the Ministry, it could seek the Centre’s support to set up a fund of Rs 2,800-3,000 crore to offer subsidy to airlines for promoting connectivity over the next decade.
But the passengers who fly on metro routes or big cities will also have to pay the cess to help fund this exercise. Based on indicative values of input variable presented above, the total fund requirement is estimated to be Rs 2,800-3,000 crore over a 10-year period (at constant prices). Considering a number of other assumptions around existing passenger base, growth in passengers expected over the next 10 years as well as likely increase in costs on account of inflation, the passenger charge/cess per departing passenger is indicatively estimated to be in the range of Rs 40-50, Deloitte has said in its report.
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