To make air travel affordable for the common man, the Ministry for Civil Aviation (MoCA) unveiled the draft civil aviation policy on Friday proposing the air fare to be about Rs 2,500 per hour on certain routes.
The policy proposes an upfront subsidy to airlines so that the cost of air travel can be brought down under the Regional Connectivity Scheme (RCS).
Unveiling the much-awaited draft civil aviation policy, the government on Friday proposed tax incentives for airlines, maintenance and repair works of aircrafts besides mooting 2 per cent levy on all air tickets to fund regional connectivity scheme.
Besides the incentives for airlines, the civil aviation ministry has also pitched for over 50 per cent foreign direct investment (FDI) in domestic carriers in case the open skies policy is implemented.
At present FDI limit is 49 per cent.
Under open skies policy, overseas airlines can operate unlimited number of flights into and out of India.
"The government expects about Rs 1,500 crore annually from charging 2 per cent levy, " civil aviation secretary R N Choubey said.
The policy has mooted various measures to boost regional connectivity including setting up of no-frills airports and providing viability gap funding for airlines.
To make MRO (maintenance repair, overhaul) cheaper, the government has proposed to exempt such activities from service tax net and not levy any VAT.
However, the government has decided to seek more comments from stakeholders before taking a final call on 5/20 norms — whereby local airlines can fly overseas only when they have five years operational experience and at least a fleet of 20 aircraft.
The policy has now mooted three options — abolish the norm completely, continue with it or link overseas flying rights with domestic flying credits.
Meanwhile, the government has also proposed to set up no-frills airports at over 401 unused air strips across the country at an estimated cost of around Rs 50 crore each for supporting flights to these unconnected destinations. The push for air travel proposed under the regional connectivity scheme is expected to boost domestic air traffic to 300 million by 2022 from 70 million now, reports Indian Express.
The draft policy would be put up for comments from stakeholders for three weeks.
(With inputs from PTI)
Contact HuffPost India
Also see on HuffPost: