UDAN Funding: Government Brings Down Levy To Rs. 5,000

The government has decided to reduce the regional air connectivity levy charged from airlines flying on major routes to a uniform rate of Rs. 5,000 per flight.

To fund the ambitious regional connectivity scheme -- UDAN (Ude Desh ka Aam Naagrik) -- the Civil Aviation Ministry is collecting a levy of up to Rs. 8,500 per departure from airlines operating in major domestic routes, including Mumbai and Delhi.

According to a senior official, the ministry has decided to bring down the levy amount to a uniform rate of Rs. 5,000 per flight on major routes.

The move comes at a time when the government is looking to "refine" the present norms for UDAN ahead of the second round of bidding which is likely in three months.

With at least half of the seats in UDAN flights offered at subsidised fares, the participating carriers would be provided a certain amount of Viability Gap Funding (VGF) -- an amount shared between the Centre and the states concerned.

The levy is being collected towards the VGF. The Federation of Indian Airlines (FIA) has already challenged the collection of levy from carriers for the RCS fund in the court. Jet Airways, IndiGo, SpiceJet and GoAir are members of the FIA.

The Ministry started collecting the levy from December 1, 2016. Airports Authority of India (AAI) is the nodal agency for UDAN.

When asked about local carriers moving court against the levy, AAI Chairman Guruprasad Mohapatra recently told PTI that he hoped that the issue would be resolved soon even as he asserted that the scheme would not suffer due to court case.

"The scheme will not be affected by virtue of this dispute...These are all government of India schemes and they don't suffer on account of some court cases. They are sovereign commitments," he had said.

Last month, UDAN scheme commenced with the first flight starting from Shimla to the national capital. In the first round of UDAN bidding, five airlines won bids to operate on 128 routes connecting 70 airports of which 31 are un-served.

"(Before) the second round of bidding, we will further refine (the scheme) after extensive stakeholder consultations," Mohapatra had said.