The objective of Regional Connectivity Scheme
- To make flying affordable for the masses,
- To promote tourism,
- Increase employment
- Promote balanced regional growth
Implementation and Its Agency
- Airport Authority of India will be the implementing Agency for the Scheme.
- The RCS route would have to include un-served airports i.e. airports where there is no scheduled commercial flight or under-served airports i.e. airports which have 7 or less scheduled commercial flights per week.
- The RCS routes would cover a length between 200 to 800 km.
- But this criteria would not apply to hilly areas, islands, North-east region and for helicopter operations.
- The procedure for selecting Airline Operators would be based on reverse bidding mechanism.
- Two half-yearly cycles would be the basis for inviting and evaluating the proposal.
- Depending upon suggestions given by Stakeholders the para-meters for financial proposal could be (1) VGF per RCS seat (2) Total VGF per week (3) combination of (1) and (2).
- The selected Airlines will enjoy a period of exclusivity on the awarded routes.
- The exact period would be fixed on the basis of suggestions by Stakeholders.
- The Central Government will support the RCS Scheme by levying an excise duty of only 2% on Aviation Turbine Fuel (ATF) purchased at RCS Airports for a period of three years.
- The service tax will be levied at only 10% of the taxable value of tickets for RCS seats for a period of one year.
- The State Governments will charge Vat of 1% or less on ATF at RCS Airports for a period of 10 years. It will also provide security and fire services free of cost, besides providing electricity, water and other utility services at concessional rates.
- A Regional Connectivity Fund would be created to subsidise the operation of the RCS.
- Viability Gap Fund (VGF)
- The VGF would be calculated on normative basis.
- The VGF support for respective routes would be indexed to inflation and ATF prices which would be reviewed periodically.
- The VGF support would also be linked to the passenger load factor.
Airline Operations and Permission
- To operationalise the Scheme Aircrafts and helicopter operators would be required to assess the demand on various routes and submit their proposal for providing connectivity on such routes.
- The fare for such seats would be capped based on flight distance and time.
- An index has also been prepared for airfare caps for the RCS seats for fixed wing aircrafts
- The operating Airline will be free to enter into code sharing arrangement with domestic and international airlines.
- Airline Operators will exempt RCS flights from landing charges, parking charges, and terminal navigation landing charge
- The selected airlines on their part would be expected to commit 50% of the seats on RCS flights to be sold at the specified airfare cap.
- They would also be required to maintain a frequency of minimum, three flights per week and maximum seven flights per week.
- The Exit Mechanism for selected airlines would be made easy after a period of one year.