Relief for Fliers, Airfares Will Not Get Expensive Atleast for Now

The draft policy to impose two percent levy on air tickets will go under the cabinet’s scrutiny only in mid-January.

Government defers plan to impose two per cent levy on most domestic and international air tickets from January 1. (Photo: Reuters)

The plan to impose two per cent levy on most domestic and international air tickets from January 1 has been deferred by the government, for now. Had the draft been approved, travel would have been a little more expensive.

The reason cited by the Civil Aviation Ministry was that the Draft Aviation Policy is expected to come before the cabinet for approval only in the middle of next month.

The draft policy unveiled by the ministry on October 30 planned to impose the two per cent levy to raise funds to improve regional air travel infrastructure. The proposal was to come into effect from January 1, 2016.

The Civil Aviation Ministry is preparing the draft note for the cabinet, which is likely to be ready by December 25, following which it will be sent for inter-ministerial comments, ministry sources said on Thursday.

“As per procedure, various ministries concerned including Finance, Home, Defence, Law and MEA among others will be given 15 days time for their comments. In all likelihood, the draft note will be sent to the cabinet for its approval around January 15 next year,” sources in the ministry said. 

In the draft policy, the ministry had proposed measures to bolster regional air connectivity. This includes levying additional cess and providing viability gap funding.

RCF (Regional Connectivity Fund) will be funded by a levy of two per cent on all domestic and international tickets from January 1, 2016 onwards. The RCF levy will be applied on all routes other than Cat IIA routes and Regional Connectivity Scheme(RCS) routes.

<b>Excerpt From the Draft Proposal</b>

The government expects to mop up about Rs 1,500 crore annually from imposition of the levy.