Soon after putting the draft civil aviation policy in the public domain for stakeholder comments, RN Choubey, Secretary – Civil Aviation, met with BusinessLine to outline the policy’s finer details.
A lot of what is being proposed involves the States — such as an 80:20 viability gap funding (VGF) where the Centre will meet 80 per cent of the cost and the States, the rest. Have the States accepted this proposal?
We will make this offer. It is up to the States. If they want regional connectivity to progress, they must make tax on aviation turbine fuel (ATF) less than 1 per cent and agree to this 20 per cent (VGF). They also must agree to provide water and power at concessional rates and security free of cost. We want it in place by April 1, 2016.
That prediction is a difficult one.
Has the offer of VAT of 1 per cent or less in Regional Connectivity Scheme airports been made to the States?
Now it will go. Any State which wants small airports and regional connectivity and (wants) its people to start flying…after all we are seeking VAT of 1 per cent or less on ATF, on fuel which is not being sold now. So there is no loss to them.
Why should I pay subsidy which goes in part to the State? The idea is that subsidy should be given for the benefit of the flyers.
In the case of Maintenance, Repair and Overhaul (MRO) a lot goes into the Finance Ministry domain — such as zero-rated service tax on output services. Has the Finance Ministry come on board?
Significantly.
Could you expand on this?
Probably not at this moment. I do not want to take away the right of the Finance Ministry to give its views independently. But we have discussed issues. Otherwise, we would not have put it in the policy. The broad policy directions are out.
Is the Finance Ministry on board for providing infrastructure status under section 80 IA for MRO, ground handling, cargo and ATF infrastructure co-located at airports?
The broad policy directions of the Finance Ministry are all right.
Why a two-phase process when looking at following an open sky policy?
We have to open it in a calibrated manner.
Linking VGF to ATF price and inflation means that as ATF comes down so will VGF?
VGF has operational and fixed costs. The operational costs largely consist of ATF. The intention is that one part of the VGF will be linked to ATF prices and the other part to the inflation index. If inflation goes up 2 per cent then that part of VGF goes up 2 per cent.
How much more will a flyer have to pay on domestic and international flights because of the 2 per cent cess?
If the ticket is priced at ₹5,000 then the proposed increase will see the ticket price go up by ₹100.