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Soon after putting the draft civil aviation policy in the public domain for stakeholder comments, R.N. Choubey, Secretary Civil Aviation met with the Business Line in his office to outline the policy’s finer details.
Edited excerpts of the interview:
Q : A lot of what is being proposed like viability gap funding (VGF) in proportion of 80:20 where the centre will meets 80 per cent of the cost and states will meet 20 per cent of the cost involves the states. Has this proposal been accepted by them?
A : We will make this offer (now). It is up to the states. If the states want regional connectivity to progress they must make tax on aviation turbine fuel less than 1 per cent and agree for this 20 per cent.
They also must agree to provide water and power at concessional rates and security free of cost. We want it in place by April 1, 2016.
Q : How many states will come on board so that you can operationalise this by April 1?
A : That prediction is a difficult one.
Q : Has the offer of Value Added Tax of 1 per cent or less in Regional Connectivity Scheme airports been made to the states?
A : Now it will go. Any state which wants small airports and regional connectivity and (wants) that people in that state start flying……. after all we seeking VAT of 1 per cent or less on ATF. On fuel which is not being sold now. So there is no loss to them.
Why should I pay subsidy which goes in part to the state? The idea is that subsidy should be given for the benefit of the flyers.
Q : In the case of Maintenance, Repair and Overhaul (MRO) there is a lot which goes into the Finance Ministry domain. Like service tax on output services will be zero-rated. Has the Finance Ministry come on board?
A : Significantly.
Q : Could you expand on this?
A : Probably not at this moment. I do not want to take away the right of the Ministry of Finance to give its views independently. But we have very significantly discussed issues otherwise we would not have put it in the policy. The broad policy directions are out.
Q : Is the Finance Ministry on board for providing infrastructure status under section 80 IA for MRO, ground handling, cargo and ATF infrastructure co-located at airports?
A : The broad policy directions….. otherwise all this will not find place. The broad policy directions of the Finance Ministry are all right.
Q : Why a two phase process when looking at following an open sky policy?
A : We have to open in a calibrated manner.
Q : Linking VGF to the price of aviation turbine fuel and inflation means that as ATF comes down so will VGF?
A : VGF has operational and fixed costs. Operational costs largely consist of ATF. The intention is that one part of the VGF will be linked to ATF prices and the other part to the inflation index. If inflation goes up 2 per cent than that part of VGF goes up 2 per cent.
Q : How much more will a flyer have to pay on domestic and international flights because of the 2 per cent cess?
A : If the ticket is priced at ₹ 5,000 then the proposed 2 per cent increase will see the ticket price go up by ₹ 100.
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