Conditions apply:The Centre will grant financial aid only for the actual number of passenger seats that are unsold.AFP
State governments will be able to encourage tourism on preferred international air routes by offering subsidy to domestic airlines for a period of three years. The Ministry of Civil Aviation has prepared a draft scheme document for “UDAN International” and invited comments from stakeholders till September 4.
The scheme is designed for State governments that are keen to promote air connectivity on international routes identified by them and for which they are willing to provide subsidy to airlines.
The airlines will bid on the percentage of flight capacity for which they require financial assistance, provided that the figure doesn’t exceed 60% of the flight capacity. The entity that quotes the lowest amount will be awarded subsidy for a particular route.
However, the government will grant financial aid only for the actual number of passenger seats that are unsold, even if the airline had sought subsidy for a higher percentage of seating capacity at the time of bidding.
No cap on fares
An airline that is awarded a particular route will have exclusive rights to a subsidy on that route for a period of three years. The key difference between this scheme and the regional connectivity scheme (RCS) for domestic routes is that there is no capping of fares. Under RCS, fares are capped at Rs. 2,500 for one hour of flight on a fixed wing aircraft in order to make air travel affordable, which was why the scheme was called Ude Desh Ka Aam Nagrik (UDAN).
“When we look at international connectivity, we are looking at people with disposable incomes looking to undertake air travel for the purpose of tourism,” a source said, explaining the rationale behind not capping fares. So far, Assam has proposed to offer Rs. 100 crore per year for flights to Kathmandu, Dhaka, Singapore, Bangkok, Kuala Lumpur and Yangon. Andhra Pradesh has also expressed its keenness to the Civil Aviation Ministry to encourage tourism.
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