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Construction : Transport Update | April 2016 | Source : Infrastructure Today

Cess to boost regional flights may push up air fares

A cess of Rs.8,000 on each domestic flight could be the alternative to the aviation ministry's proposed 2 per cent surcharge on flight tickets to fund regional connectivity. This charge will reportedly be levied on airlines, who in turn will pass it on to passengers pushing up the cost of flying by up to `100 per person. Coupled with the Budget raising excise duty on jet fuel, operating cost for airlines could rise by up to 5 per cent and lead to a similar hike in fares. Sources say the aviation ministry is planning this levy after ministers like Arun Jaitley, Piyush Goyal and Rajiv Pratap Rudy rejected their plan to have a 2 per cent surcharge on air tickets. The ministry wanted to levy this on all those flying to metros, big cities and abroad to raise viability gap funding (VGF) to cross-subsidise regional flights by capping their fares at `2,500 per hour of flying.
 
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