Ministry of Civil Aviation, Puducherry and AAI sign MoU to promote regional connectivity scheme

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NEW DELHI (INDIA): The Ministry of Civil Aviation, State Government of Puducherry and Airports Authority of India today signed a tri-partite Memorandum of Understanding (MOU) for the Regional Connectivity Scheme thereby initiating the collaborative partnership.

The MOU was signed at New Delhi in the presence of Minister of Civil Aviation for State,  Jayant Sinha, the Hon’ble Chief Minister of Puducherry, V. Narayanasamy and Hon’ble Minister of Tourism and Civil Aviation of Puducherry , Malladi Krishna Rao.

With today’s development, the State Government of Puducherry has formally agreed to provide the concessions required from the State Governments in the Regional Connectivity Scheme.

The MoU is signed by Manoj Parida, Chief Secretary, Puducherry, Usha Padhee, Joint Secretary, Ministry of Civil Aviation and A.K. Dutta, Member, Airports Authority of India.

Speaking on the occasion, the MOS for Civil Aviation,  Sinha said that he hoped the subsidies would attract airlines which also needed to find the appropriate aircrafts and pilots to service the regional sector.

The Chief Minister of Puducherry, V. Narayanaswamy said that he was happy to cooperate in promoting the Regional Connectivity Scheme as it would improve the connectivity to Puducherry.

The Ministry of Civil Aviation had earlier released the draft Regional Air Connectivity Scheme (RCS) for stakeholder consultation, with the twin objectives of promoting balanced regional growth and making flying affordable for masses.

The RCS is the key component of the National Civil Aviation Policy which was released by the Ministry on 15th June 2016. The scheme, which would be in operation for a period of 10 years, envisages providing connectivity to un-served and under-served airports of the country through revival of existing air-strips and airports. This would 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 the passenger fares are kept affordable. The fare for a one hour journey of appx. 500 km on a fixed wing aircraft or for a 30 minute journey on a helicopter would now be capped at Rs. 2,500, with proportionate pricing for routes of different lengths / duration.

To reduce the cost of operations, Central Government would be providing concessions in the form of reduced excise on VAT, service tax and flexibility of code sharing at the RCS airports. Similarly, the State governments would have to lower the VAT on ATF to 1% or less, besides security and fire services free of cost and electricity, water and other utilities at substantially concessional rates. Similarly, Landing and Parking charge and Terminal Navigation Landing Charges shall not be imposed by the airport operator.

A Regional Connectivity Fund would be created to fund the VGF requirements under the scheme. The same would be funded through a levy on certain domestic flights. The partner State Governments would also contribute a 20% share to this fund (10% for North Eastern States). For balanced regional growth, the allocations under the scheme would be equitably spread across the 5 geographical regions of the country viz North, West, South, East and North-east.

The States have been given a key role under the scheme. The selection of airports where RCS operations would be done in consultation with State Government and after confirmation of their concessions. This will be based on the selection of routes by the airline operators.

In view of the above, the Ministry of Civil Aviation is in the process of signing of an MoU with State Governments to ensure their commitment and support to regional air transport operations by providing concessions as required under the RCS for making it successful. Puducherry is the sixth State with which such an MoU is signed. The other states are Maharashtra, Chhatisgarh, Gujarat, Jharkhand and Andhra Pradesh.