NEW DELHI, June 15 - In a move to boost regional air connectivity, the new Civil Aviation Policy has proposed Viability Gap Funding (VGF) in the ratio of 90:10 for the northeastern States.
The Union Cabinet today cleared the new Civil Aviation Policy with an aim to increase regional air connectivity and ease rules for airlines to fly overseas. The policy focuses on regional connectivity with an aim to providing affordable aviation services in Tier-II and Tier-III cities. It will bring down the prices of air tickets due to exemptions in service tax, customs duty, landing and parking fee and VAT.
Under the policy, the airfares have been fixed at Rs 2,500 for an hour-long flight.
Briefing reporters, Union Minister Ravi Shankar Prasad said that the policy has quashed the rule which restricted companies from flying abroad unless they have flown in India for 5 years and have a fleet size of 20 aircraft.
The policy aims to bolster the domestic aviation sector by tapping its high growth potential with provisions such as capping airfares at Rs 2,500 for a one-hour flight, auctioning of unilateral traffic rights, tax incentives for airlines, maintenance and repair works of aircraft besides mooting 2 per cent levy on all air tickets to fund regional connectivity scheme and providing viability gap funding for airlines to encourage operate on regional routes.
About the concessions given to the NE States, Civil Aviation Secretary, RN Choubey said that VGF is to be shared between the Ministry of Civil Aviation and the State Governments in the ratio of 90:10 in case of the NE States and 80:20 for the other States. He said that withdrawal or revision of domestic operation to NE region can be done under prior intimation to the Ministry of Civil Aviation at least three months before withdrawal or revision of the service.