Regional Connectivity Scheme
- The Indian Aviation sector has not been able to develop in accordance with its true potential. Out of 125 crore Indians, 35 crore are middle-class but the number of tickets sold is only eight crore. It’s a pity that middle-class Indians with reasonable amount of disposable income are not able to fly once in four years.
- Lack of regional connectivity- Many parts of India especially the North East lack the necessary air connectivity.
- Hence, the Regional Connectivity Scheme (RCS) has been launched to fulfil the following objectives:
- to make flying affordable for the masses
- to promote tourism
- increase employment
- Promote balanced regional growth.
- It also intends to put life into un-served and under - served airports
Features of scheme
- Aircrafts and helicopter operators would be required to assess the demand on various routes and submit their proposal for providing connectivity on such routes.
- The procedure for selecting Airline Operators would be based on reverse bidding mechanism.
- The airlines would be required to earmark certain number of seats on every flight for the RCS. The fare for such seats would be capped based on flight distance and time. For eg passengers will be able to fly an hour’s journey (of about 500 km) for an all-inclusive fare of Rs 2,500
- Airfares will be capped in the range of Rs.1,700-Rs.4,070 and will be revised every quarter based on the prevailing inflation rate.
- The Airlines would also be required to maintain a frequency of minimum, three flights per week and maximum seven flights per week.
- Airport Authority of India will be the implementing Agency for the Scheme.
- The RCS route would have to include un-served airports i.e. airports where there is no scheduled commercial flight or under-served airports i.e. airports which have 7 or less scheduled commercial flights per week.
- The RCS routes would cover a length between 200 to 800 km. But this criteria would not apply to hilly areas, islands, North-east region and for helicopter operations.
- A Regional Connectivity Fund would be created to subsidise the operation of the RCS
- Viability Gap funding would be given to the selected airlines. The VGF support for respective routes would be indexed to inflation and ATF prices which would be reviewed periodically. The VGF support would also be linked to the passenger volumes.
- The Exit Mechanism for selected airlines would be made easy after a period of one year
- The selected Airlines will enjoy a period of exclusivity on the awarded routes.
- The Central Government will support the RCS Scheme by levying an excise duty of only 2% on Aviation Turbine Fuel (ATF) purchased at RCS Airports for a period of three years.
- As the Indian economy grows, consumption-led growth in populated metros is expected to spill over to hinterland areas. This is also expected to be on account of factors of production (land, labour, etc.) becoming costlier in the densely populated metro cities. In this scenario, air connectivity can provide required impetus to the economic growth of such regional centres. Hence, this scheme is definitely well-intended.
- The capped airfares and increased connectivity would certainly bring flying to the middle classes as envisaged by the draft aviation policy.
- For airlines
- Airline Operators will exempt RCS flights from landing charges, parking charges, and terminal navigation landing charges.
- Airlines will get security and fire services free of cost, besides providing electricity, water and other utility services at concessional rates.
- Airlines operating on regional connectivity scheme routes will get exclusive rights to fly in the particular sector.The move is well aimed at providing sustainability to their operations for one-three years.
- The NITI Aayog’s had earlier objected to the cross-subsidy idea i.e. levies on trunk routes to fund connectivity to places where an airline would not otherwise wish to go. Such cross-subsidy, it reportedly felt, was unnecessary and costly, tampering with the way the market worked.
1. The hindu
2. Economic Times
3. Press information bureau