The Hindu Business Line : Cess to boost regional air connectivity?

DOES the Government plan to do away with the route dispersal guideline for domestic airlines and instead ask them to absorb a 5 per cent cess, the funds from which are to be utilised to help existing and new airlines operate flights to regional airports?

Sources indicate that while such a move is being considered, it is still too early to say whether the cess is to be levied on the turnover of the airline on a few particular routes being operated by the airlines.

"We are examining the implications of such a move. We are still trying to understand the exact financial implications of the move. It is too early to say anything," they told Business Line.

The idea, the sources said, is to ensure that regional connectivity is improved while, at the same time, ensuring that larger aircraft that can be better deployed on routes connecting bigger cities are freed.

However, when contacted, senior Government officials refused to comment on the issue, merely saying the demand for doing away with the route dispersal guidelines has been made time and time again.

"The Ministry of Civil Aviation has not sent any new proposals to the Ministry of Finance other than what is contained in the Naresh Chandra Committee or were sent earlier. The Budget-making exercise is top secret. Keeping in mind the needs of diverse sections of the nation, what the Finance Ministry finally accepts and rejects will be known only on July 8," a senior Government official said.

The route dispersal guidelines divide air routes into three categories and each airline is required to offer at least 10 per cent of its deployed capacity on Category I (connecting major metros) routes for the uneconomical Category II routes.

These routes connect stations in the North-Eastern region, Jammu & Kashmir, Andaman & Nicobar Islands and Lakshadweep.

Also, each airline has to deploy 1 per cent of its capacity exclusively within the Category II routes and 50 per cent of the capacity provided on Category I routes on Category III routes such as Delhi-Jaipur-Jodhpur-Aurangabad-Mumbai.

Interestingly, the Naresh Chandra Committee report talks about the establishment of an Essential Air Services Fund to provide explicit subsidy support to essential but "uneconomical" services, including commercially unviable airports.

Official sources indicated that the previous Government had taken the first step on the Naresh Chandra Committee report by abolishing the 15 per cent Inland Air Travel Tax earlier this year.