Government to provide higher subsidy for airlines connecting two regional airports

The Union Government will provide higher a subsidy to airlines that operate flights between two regional airports under the Regional Connectivity Scheme.
The subsidy amount given to airlines that operate between two unserved or underserved airports will be 10% higher than sum offered to airlines that connect only one regional airport.
Key Facts

• The subsidy will be provided under the UDAN (Ude Desh ka Aam naagrik) scheme for three-years so that the route would become viable.
• It will be provided to airlines to fund their losses to enable them to offer airfares at Rs. 2,500 for an hour’s flight on half the seats under the Regional Connectivity Scheme.
• The subsidy amount for airlines connecting to one regional airport will vary between Rs. 2,350 and Rs. 5,100 per seat depending upon distance covered between two destinations.
• Besides, airlines can also transfer their rights or contract to get subsidy from government and fly on regional routes to another airline operating a similar type of aircraft..

Other decisions taken by Government to boost Regional Connectivity

• The Union Civil Aviation Ministry has scrapped its earlier proposal to reduce the subsidy amount based on improved passenger load factor.
• Earlier, the draft scheme had proposed that if an airline manages to fill 90% of its seats by operating regional flights during its first year of operations, the subsidy amount in subsequent year would be reduced by half as the route would become viable.
• Besides, Union Government has also reduced the bank guarantee to be provided by airlines to fly on each regional route.
• Now, Airlines will be required to submit a bank guarantee equivalent to 5% of the total subsidy amount.

Month: Current Affairs - October, 2016