Regional connectivity Scheme

• Directorate General of Civil Aviation decision to set up rules which will be less rigorous will be beneficial to Regional connectivity scheme.
• There will be less stringent norms to both 80 seater and 19 seaters smaller aircraft.
• This decision will support regional connectivity scheme because there will be less number of passengers in smaller routes and a big aircraft might not be profitable to operate on such routes. For this, smaller aircrafts are feasible but the rules as of now are too stringent for them to enter the aviation industry.
• As of now India has only fifty one 80-seater planes and four 42-seater planes run by various operators. A definite increase in number of such planes is required for the success of RCS.
• These aircrafts are expected to be imminent for the growth of the aviation industry in the near future.

About Regional Connectivity Scheme

• This scheme will come into effect in the second quarter of 2016-17
• Airfare of about Rs 2500 per passenger for a one-hour flight
• This will be implemented by way of: a) Revival of airstrips/airports as No-Frills Airports at an indicative cost of Rs. 50 crore to Rs 100 crore; b) Demand driven selection of Airports/airstrips for revival in consultation with State Govts and airlines
• Viability Gap Funding (VGF) to airline operators: RCS only in those states which reduce VAT on ATF to 1% or less, provide other support services and 20% of VGF
• Concessions by Stakeholders: a) There will be no airport charges; b) Reduced Service tax on tickets (on 10% of the taxable value) for 1 year initially ; c) Reduced Excise duty at 2% on ATF picked at RCS airports
• State government will provide police and fire services free of cost. Power, water and other utilities at concessional rates
• Creation of Regional Connectivity fund for VGF through a small levy per departure on all domestic flights other than Cat II/ Cat IIA routes, RCS routes and small aircraft below 80 seats at a rate as decided bythe Ministry from time to time
• VGF to be shared between MoCA and State Governments in the ratio of 80:20. For the North Eastern States, the ratio is 90:10

By: Vishal