Monday, June 21, 2021
Home News Reports Misreporting by media on Aviation Policy's proposal of Rs 2500 cap on airfares

Misreporting by media on Aviation Policy’s proposal of Rs 2500 cap on airfares

The civil aviation policy was cleared by the cabinet yesterday. There was a presentation on the policy by civil aviation ministry in front of media followed by a question answer session. Although this new policy includes many path-breaking changes, which can be referred to as so called ‘big bang reforms’, there was one single point that got the most attention on both news media and social media. This point is, the Government has capped the price of air tickets at the rate of ₹2,500/- per hour of air travel.

Here are some of the media articles that mention that air fare has been capped at ₹ 2,500/- per hour:

ANI News
ANI News

Indian Express: New civil aviation policy: Rs 2,500 for 1-hr flights; 5/20 norm scrapped

India Today: New Civil Aviation Policy passed: Cap of Rs 2500 for hour-long, Rs 1300 for 30-minute flights

Hindustan Times: New civil aviation policy focuses on capping fares, regional connectivity

There was some outrage also on this, as how can government fix price of air ticket which is such a communist measure and against the principle of ease of doing business.

But has the Government of India really capped the price of air tickets? If you were paying attention to the presentation of ministry and the subsequent press conference, you will find that the reality is far from it. The fact is, there is no such cap on existing routes on which airlines are operating at present. This cap is applicable only on connecting to some new airports that will come up under Regional Connectivity Scheme introduced in the civil aviation policy today.

Let’s see some detail regarding this.

The central government has realised that India has one of the lowest domestic air connectivity for its size. India needs many more airports to improve this situation and provide connectivity to tier 2 and tier 3 cities. But building new airports in those places will be hugely expensive and time consuming. Incidentally, there are around 350 airstrips scattered across the country which are presently not used. Many of those were built during WW-II, some were built later but were abandoned as the demand was not enough to sustain air operations to those places. Now government has decided to convert some of these airstrips into functioning airports at investment of around ₹100 crore per airport. These airports will come under Regional Connectivity Scheme (RCS). This scheme will require support and participation of state governments which want such airports in their states.

Now, even after these airports are developed, air connectivity to these places will not be economically viable as demand is less in these sectors compared to metros and tier 1 cities. Because there are not enough people in those places who will buy air tickets at current prices. This is the reason some of the existing airports in such places are non-operational at present. Hence government has decided to cap air fare ONLY on these routes at ₹2,500/- per hour of flying, on pro-rata basis. Means for 2 hours of flight it will be ₹5,000/- and so on.

This cap will not be applicable on flights between two existing functional airports, it will be applicable only on flights between an existing airport and a new RCS airport, or between two RCS airports.

And, the Government is not forcing airlines to sell ticket at low price, but it is helping in bringing the price to such level, by taking following steps:

• Service Tax will be charged on only 10% of the ticket price. Means if a ticket costs ₹2,000/-, service tax will be applicable only on ₹200/-, making the tax amount only one-tenth of normal amount.
• The state government will be required to charge only 2% VAT on aviation turbine fuel purchased at these airports.
• The airports will not charge any kind of charge from the airlines for use of the airports.
• State governments will have to provide police and fire services free of cost.
• For any loss that airlines have to bear due to the cap in ticket price, Government of India will fund them through Viability Gap Funding, which will be collected through a cess applied on ticket prices of non-RCS routes.

So, the Government is implementing this cap by reducing its share in the ticket price, which is substantial, and also by providing Viability Gap Funding. Hope this clears the confusion created by usual misleading news by mainstream media.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Raju Das
Corporate Dropout, Freelance Translator

Related Articles

Trending now

International Yoga Day: PM Modi launches M-Yoga app, emphasises the importance of Yoga during the Coronavirus pandemic

7th edition of International Yoga Day celebrated across the world. The theme for this year is Yoga for Wellness.

Lakshadweep admin refutes PTI report on proposal to shift jurisdiction to Karnataka from Kerala

On Sunday, PTI tweeted that following the protests from Lakshadweep residents, the administration had mooted proposal to shift its legal jurisdiction from Kerala High Court to Karnataka High Court.

Three booked for falsely accusing general secretary of the Ram Temple Trust in a Facebook post in ‘land scam’

Bijnor police chief Dr Dharm Vir Singh said in the statement that the matter is under investigation. However, prima facie the documents provided by the accused have found to be false.

George Soros-funded University awards former Kerala health Minister KK Shailaja for her ‘commitment to public health service’

Former Kerala Minister KK Shailaja, who was dropped from cabinet after lelection, awarded by George Soros-funded University

Gujarat: Cow smugglers kill VHP Gaurakshak Hardik Kansara, nephew of district BJP president, 10 arrested

Ten individuals have been arrested in Gujarat on accusations of murdering Gaurakshak Hardik Kansara in Valsad district.

Coronavirus: Liberal privilege that sank Kerala. Here is what went wrong

The media will choose to wait strategically till it reaches Gujarat, for more effect. And the third wave begins “officially” when the spread reaches Uttar Pradesh. And then, it will all be the fault of “Gaumutra.”

Recently Popular

OBC benefits for Muslims: How WB Police’s recruitment drive has exposed how parties found a way to make religious reservations

The drive was meant to fill vacancies in the OBC-A category in the state. The list showed that apart from one or two individuals, all of them were Muslims.

Who is Vishal Jood? An Indian national arrested for taking on Khalistani extremists in Australia

Vishal Jood, the 24 yar old from Haryana, has been languishing in a jail in the down in the country for two months now.

Republic TV issues statement over Arnab Goswami’s disappearance from the news network: Here is what they said

Arnab Goswami was last seen on May 2 during a discussion on West Bengal assembly polls. He will make a return on Monday.

Kerala madarsa teacher preaches “kill the ones who leave Islam” while taking online lecture for class 12 students

Kerala madarsa teacher caught encouraging class 12 students to take to violence against those who quits Islam as religion.

BBC removes distorted map of India from Delta variant report after uproar on social media

BBC published wrong map of India while talking about a story on the origin of Delta variant of Chinese coronavirus

Google removes ‘Ghazwa e Hind’ app from play store after uproar

Ghazwa-e-Hind that literally translates to 'holy raid of India', is a common term used by Islamic invaders and terrorists. The term finds its origin in Islamic literature named Hadiths.
- Advertisement -

 

Connect with us

255,564FansLike
554,945FollowersFollow
24,400SubscribersSubscribe