New Delhi:The government on Friday unveiled the draft regional connectivity scheme (RCS) with the intent to provide air connectivity to unserved and remote routes.
The RCS is a key component of the recently passed National Civil Aviation Policy (NCAP), whose main objective is to "enhance regional connectivity through fiscal support and infrastructure development."
The draft policy intends to grow regional connectivity via several measures such as incentives, capping of air fares for a limited number of seats and revival of existing air strips and airports.
"Today, we have given shape to the Hon'ble Prime Minister's vision of regional air connectivity in India," Civil Aviation Minister P. Ashok Gajapathi Raju said after unveiling the draft RCS here.
According to the minister, passenger fares under the RCS will be capped at Rs 2,500 per hour of flying of approximately 500 km.
"Scheme to be applicable on route length between 200 to 800 km," the minister said.
Minister of State for Civil Aviation Mahesh Sharma said: "There is an enormous interest shown by the state governments to enhance regional connectivity in their states under the NCAP."
Sharma, who is also Union Minister of State for Culture and Tourism (independent charge), said that the draft policy suggests several measures to promote regional connectivity like the incentive to operate flights to unserved and underserved airports.
"For making regional connectivity viable, the sales tax has been kept at a very low rate, there will also not be any parking, landing or navigation charges and the state governments have to provide security and fire safety services for free," Sharma said.
The ministry explained that the RCS is expected to support airlines by providing direct financial support namely viability gap funding, which would be given to the interested airlines to kick-off operations to an unserved or underserved airport. It is also expected to keep the passenger fares affordable.
"A regional connectivity fund would be created to fund the VGF requirements under the scheme," the ministry said in a statement.
"The same would be funded through a levy on certain domestic flights. The partner state governments would also contribute a 20 per cent share to this fund (10 per cent for North Eastern States)."
The allocation under the scheme is proposed to be equitably spread across five geographical regions. Once finalised, the scheme is expected to be in operation for a period of 10 years.
The ministry elaborated that once RCS is finalised, it will then invite proposals from interested airlines and helicopter operators for starting operations on un-connected routes.
"The operator could seek VGF in case there is a difference in cost of operations and estimated revenues," the ministry said.
"All such route proposals would then be offered for competitive bidding through a reverse bidding mechanism and the route would be awarded to the participant quoting the lowest VGF requirement."
However, the financial support or VGF would be withdrawn after a period of three years or when the passenger load factor of the airline gets above 90 per cent.
The ministry said that the selected airline operator would have to provide a minimum of nine and maximum of 40 seats on an RCS flight.
"On each such route, the minimum frequency would be three and the maximum, seven per week."
The ministry has invited feedback from all stakeholders by July 22.
