Air India has started levying a fee of ₹70 per passenger on most of the domestic routes that it operates. This will lead to a marginal increase in fares on these flights.

Air India started imposing the levy on January 16 this year, which will go to fund the government’s Regional Connectivity Scheme (RCS). The new levy is applicable on routes other than the the North-East region, Jammu & Kashmir, Andaman & Nicobar Islands, and Lakshadweep.

Escrow account

Other airlines are yet to impose the regional connectivity scheme (RCS) levy, with a SpiceJet official telling BusinessLine that it had not started imposing it.

The money Air India collects will be deposited in an escrow account operated by the Airports Authority of India and will be used for subsidising flights to the interior parts of the country under UDAN. The Centre is imposing a levy of ₹7,500 per flight between cities which are up to 1,000 km apart. For distances of 1,000-1,500 km, the levy will be ₹8,000 per flight, and for above 1,500 km, ₹8,500 per flight. The levy is based on the total seats in the aircraft and not the number of seats that an airline manages to fill.

The scheme, which will be in operation for a period of 10 years, envisages providing connectivity to un-served and under-served regions of the country through revival of existing air-strips and airports.

This will be achieved through a financial stimulus in the form of Central and state government concessions, as well as viability gap funding to the interested airlines to kick off operations from such airports so that fares are kept affordable.

The fare for a one-hour journey of approximately 500 km on a fixed wing aircraft or for a 30-minute journey on a helicopter would be capped at ₹ 2,500 under the scheme, with proportionate pricing for routes of different lengths/ duration.

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