The Airfares To Your City May Soon Be Capped To Just Rs.2500

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Recently, Civil Aviation Secretary R N Choubey stated that in order to boost the regional connectivity, the government has proposed a two percent less on all the air tickets which would be utilized towards the Viability Gap Funding. He also provided more clarity on the mater stating there would be no compulsion on the airlines to cap fares on regional routes.

The proposed cap of fares has been set at Rs.2500 per ticket and would be applicable only on those carriers who are viability availing gap funding from the Aviation Ministry.

Another proposal has been to cap fares at Rs.2500 for one hour flight under the scheme. The government expects to raise about 15 billion (Rs 1500 crore) towards VGF in a year.

Choubey said that our commitment should not exceed the proceeds from the 2 percent levy, Out of the total VGF eighty percent would be provided by the Center and the remaining by the concerned state. He is expecting that in the two year around 50 air ports would revive which are currently not under function.

He responded to a query about the draft policy stating that there are options on the 5/20 rule, He told that we have our Internal process if there are divergent views we will look into it and will reach at an appropriate solution. Under this norm only the local carriers who have been operational for 5 years and are having a fleet of 20 planes are allowed to fly abroad.

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The government has taken suggestions from stake holders on three options, Carriers like Air Asia and Vistara has demanded the removal of the 5/20 norm so that they can also operate abroad flights. However, the existing airlines are opposed to any change in the rule.

Choubey also said that in order to decide to whom should be the VGF be extended, the ministry would be looking at the options of normative pricing mechanism if there is only one bidder for a distinct route. After the policy is finalized a detailed document would be released from the Ministry.

Source: Rediff

Image Sources: Image 1, Image 2 & Featured Image.

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