1-hr flight fare to cost only Rs 2500:Draft aviation policy

Moneycontrol BureauWith a view to popularise air travel among the middle class, the draft civil aviation proposes to boost regional connectivity and cap airfares for one hour flights between small cities at Rs 2500 per passenger.There will be 'no frills' airports in smaller cities with the government reviving unused airports—many of them from the time of World War II—and spending Rs 50 crore per airport. This is being done as acquiring land for new airports will be a cumbersome process and could even take years.To help airline companies keep their costs down, the draft policy has proposed tax concessions. Aviation turbine fuel drawn from regional connectivity airports is to be exempted from custom duty. The policy has proposed waiver of service tax on maintenance, repair and overhaul (MRO) expenses incurred by airline companies.Also, the government will provide viability gap funding to ensure that airfares for one hour flights can be limited to Rs 2500 per passenger. The funding will be indexed to aviation turbine fuel price, which forms a major chunk of airlines’ expenses.The viability gap funding will be shared by the Centre and the State in the ratio of 80:20.The policy proposes that the 5:20 rule for overseas flights be retained in current form, or abolished altogether, or be replaced with a system of domestic flying credits (DFC). The 5:20 rules states that carriers seeking international flying rights should have completed five years of domestic operations and have a fleet of 20 aircraft.Under DFC, airlines will be credited miles for flying domestic which can be redeemed for overseas flying rightsCarriers looking to fly to SAARC countries will need to have a minimum of 300 DFC, the policy proposes.The draft policy aims to lift India to the third rank in the global aviation industry from the tenth rank currently.The policy has been put up for public comments, and then for inter-ministerial consultations, after which it will be sent for cabinet approval.Also read: Draft civil aviation policy intent right; implementation key