Government imposes levy on flights, air fares set to rise marginally

Government on Friday has decided to impose a levy of Rs 7500 for flights of up to Rs 1,000 Kms. For flights between 1,000-1,500 km, the levy will be Rs 8,000 and for flights beyond 1,500 km, the levy will be Rs 8,500.With the fresh levy, the domestic air fare is expected to surge sharply.  

News Nation spoke to aviation expert, who on condition of anonymity, explained that levy would be passed to customers but it would be marginal. Air fares wil surge by Rs 80-100 per ticket by the move. "The levy is imposed on per flights meaning suppose if in a flight there are 100 passengers then Rs7500 would be shared by the whole number of passenger, resulting in surge in prices by Rs75 per ticket," explained the source.     

The levy amount would be for an entire flight and theprice of each ticket could go up depending on the number ofseats in that particular flight.     Civil Aviation Secretary R N Choubey on Friday said the levywould be up to Rs 8,500 per flight depending on distance. The ambitious scheme -- UDAN (Ude Desh ka Aam Naagrik) --seeks to connect small cities by air as well as make flyingmore affordable for the masses. To provide viability gap funding for the flights operatedunder the regional connectivity scheme, the Ministry wouldimpose a levy on every departure on major air routes such asthe national capital, Mumbai, Chennai, Hyderabad, Bengaluruand Kolkata. "The levy for an up to 1,000 kilometre length ofscheduled flight will be Rs 7,500 per flight, Rs 8,000 for a1,000 to 1,500 kilometre flight and Rs 8,500 for flights above1,500 kilometre," Choubey said in New Delhi.

Read More: Regional connectivity scheme 'UDAN' takes off, airfares capped at Rs 2,500 for 1-hour flight

 For UDAN, the government would be creating the RegionalConnectivity Fund (RCF). With the levy, the government estimates to have Rs 400crore for RCF, Choubey said. "In addition to this, another 20per cent (funding) will come from state governments. We areroughly looking at around Rs 500 crore per year available inthe kitty," he noted. The move would push airfares slightly higher as airlinesare expected to pass on the burden to fliers. The funding is being provided since the fares of half ofthe seats operated in a particular flight under UDAN would becapped at Rs 2,500 for one-hour duration. This cap would beapplicable for distance of 476-500 kilometres.

The limit of RCS airfare would vary from Rs 1,420 to Rs3,500 for fixed-wing aircraft. For helicopters, half-an-hourride under the scheme would cost Rs 2,500 and for over one-hour duration, the cap would be Rs 5,000. RCF is to be funded by the Centre and respective stategovernment participating in UDAN.