UDAN bids for 43 airports despite airlines opposing levy

According to sources in the aviation ministry, only State-owned Air India and private carrier AirAsia India have agreed to pay the surcharge.

Even as uncertainty looms over the proposed levy for funding the ambitious regional connectivity project in aviation — Ude Desh ka Aam Nagrik or, simply, UDAN — the government says the scheme would see its first flight next month and put 43 new airports on the map.

According to sources in the aviation ministry, only State-owned Air India and private carrier AirAsia India have agreed to pay the surcharge.

"They have started levying the surcharge on their air tickets. Other airlines are yet to do, as the case is sub judice," said an official.

Minister of state Jayant Sinha said the ministry was in discussion with the airlines. Funding by other means could also be considered.

"The government is firmly behind this scheme, which is market-driven and will promote air travel," he said, describing it as a 'game-changer' in Indian aviation.

Bids have been received for 190 routes under the scheme, for several new airports, including Bhavnagar, Cooch Behar, Jamshedpur and Jalandhar. The scheme aims to promote low-cost flying between these cities, capping the fare at Rs 2,500 for an hour's flight by subsidising airline loss through a regional connectivity fund.

The Federation of Indian Airlines — IndiGo, GoAir, SpiceJet and Jet Airways are members, with 80 per cent combined market share — says the government has no authority to impose a levy in the nature of a tax on air services. The case's next hearing is on February 1.

The government has decided on a levy of up to Rs 8,500 per flight on major routes to fund the scheme. The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in a flight. The levy for up to 1,000 km of a scheduled flight will be Rs 7,500 and Rs 8,000 for a 1,000 to 1,500-km flight and Rs 8,500 for more than 1,500 km.

The proceeds go to a regional connectivity fund, to provide viability gap funding for flights under the UDAN scheme. The levy would be applicable on routes connecting major cities of Mumbai, Delhi, Bengaluru, Chennai, Hyderabad and Kolkata.