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Ashwini Phadnis Carrying forward the government’s Regional Connectivity Scheme (RCS) or UDAN, Budget 2018-19 provides, ₹ 1,014.09 crore for operating flights to tier II and tier III cities within the country during 2018-19. This is a five-fold increase from the ₹200 crore made available in the previous year.
The over ₹1,000-crore corpus will be used to provide Viability Gap Funding (VGF) for flights being operated under RCS. The scheme hopes to get the common man fly by connecting tier II and tier III cities in the country.
The scheme seeks to incentivise airlines and operators with the government providing Viability Gap Funding to make operations to these cities profitable. Under the scheme, airlines are required to provide at least 50 per cent of the seats on every flight at ₹2,500 for one hour of flying. The ceiling of subsidised seats is 40, while the minimum number of seats on an aircraft which have to be offered to avail VGF is 9.
The ₹1,014.09-crore for VGF will come from the dividend that Airports Authority of India will be paying to the government in 2018-19. The Ministry of Civil Aviation had written to the Finance Ministry seeking that a portion of the dividend being paid by AAI be used to part fund the VGF requirements for UDAN. The Budget also talks about NexGen Airports for National Accreditation Board for Hospitals & Healthcare Providers (NABH), but what these will look like was not immediately clear as officials declined to comment on the proposed structure of these airports.
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