Airports Authority of India to partially fund RCS

Allocating money from dividend fiscal

Aviation

January 26, 2018

/ By / New Delhi



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The AAI’s is making contributions to the RCS, to fill the gap in funding and ensure smooth flying of operators who have joined in the second round of the scheme.

The Airports Authority of India (AAI), which is responsible for managing and upgrading Indian airports, will be using part of its dividend to fund the Regional Connectivity Scheme (RCS).

A sum of INR 2 billion from the authority’s dividend fiscal has been allocated for the development of the scheme that aims to boost regional connectivity in the country.

“The finance ministry has agreed to fund the Ude Desh ke Aam Nagrik (UDAN) scheme through the dividend that AAI pays to the government every year. We already have got INR 2 billion from AAI’s dividend share for this year and will also get the amount for next year,” Indian media quoted aviation secretary R N Choubey.

UDAN, a scheme under the RCS aims to connect the currently under-served and un-served airports in the country. It also hopes to connect airports in tier-2 and tier- 3 cities, and award Viability Gap Funding (VGF) to airlines and helicopter operators.

The AAI will contribute INR 5 billion from its dividends in the next fiscal; thus ensuring that airlines and passengers do not have to face any burden, the secretary explained.

The RCS fund was so far being collected through a levy of  INR 5,000 being imposed on domestic flights on key routes and the proceeds from this is estimated to be INR 2 billion annually.

Although, there has been a shortfall in collecting these funds and the government has been able to collect approximately INR 700 million as of December 2017. This collection is not enough for the increase in the number of operators and routes in this round of  RCS and more funds are needed by the government.

The second phase of UDAN will see 25 un-served and 17 underserved airports being connected to 36 served airports and 31 helipads and heliports.

In addition to the funds, the AAI is also providing  concessions of charges levied on landing and parking.

Guruprasad Mohapatra, Chairman, AAI, in an interview with Indian media had said, while these concessions extended by it “will impact AAI” but it is a win-win situation as RCS routes turn profitable over a period of time.

“This will impact AAI. However, as the operations increase,it will be a win-win situation for AAI. Once the route develops over a period of time the route will come out of ambit of RCS and will definitely prove to be a source of revenue for AAI through collection of usual charges as at other airports,” Mohapatra was quoted.

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