Air travel in domestic flights gets costlier as regional cess comes into effect

Airlines have been opposing the DGCA order and asking the government to find some other way to create Regional Cess Fund.

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Domestic flights between metros and other big cities will cost up to Rs 100 more, because a new regional cess has been added to the price component.

"The government has decided to charge Rs 5,000 per domestic flight to create a regional connectivity fund (RCF) that will be used to provide viability gap funding to regional flights and help cap fares for such flights at Rs 2,500 per hour," reported Economic Times.

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Besides the ususal, another reason why airfares are likely to shoot up this festive season is oil-marketing companies increasing aviation turbine fuel (ATF) prices a steep 4 percent from Friday.

Though airlines did not clearly state to what extent this hike would be reflected on fares, they said any hike in operational costs would be passed on to flyers.

"The regional cess and hiked ATF prices coming into effect from Friday will mean an increase in fares as demand for travel also shoots up in the festive season. Best will be for people to book tickets in advance as buying the same closer to the date of travel will mean paying more," an airline official was quoted by ET as saying.

Regional cess kicks in

The regional cess has come into effect by an order from Directorate General of Civil Aviation (DGCA) chief BS Bhullar.

It said: "The Central government has decided to revise the date of levy on scheduled flights being operated within India to fund regional air connectivity fund at a uniform rate of Rs 5,000 per flight till further revision."

The levy came into effect from September 1, 2017.

air india, cbi registers case against ai ia merger, cbi to probe purchase of 111 aircraft, upa scams, modi govt, fm arun jaitley, merger of air india and indian airlines — Air India passenger planes are seen parked at the Chhatrapati Shivaji International airport in Mumbai, India, February 7, 2017.Reuters file

According to airline officials, the charge of Rs 5,000 per flight means a hike of Rs 50-100 for passengers. This levy will be reviewed at regular intervals.

The aviation industry had plans to levy 2 percent surcharge on flight tickets in order to fund regional connectivity, but it faced opposition from ministers like Arun Jaitley and Piyush Goyal as it would make air travel costlier.

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The ministry then came up with Rs 8,000 cess on each domestic flight instead of the 2 percent levy. It was finally fixed at Rs 5,000.

Airlines have been against this order, and have been asking the government to find some other way to create the RCF.