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Alliance Air gets Viability Gap Funding From States

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New Delhi. 08 August 2017. The Alliance Air, a wholly owned subsidiary of Air India, has been operating flights under Viability Gap Funding (VGF) arrangements with some State Governments on Cost minus Revenue equals to VGF arrangements.

With North Eastern Council (NEC) in the North East, Alliance Air operates flights with ATR42 aircraft on the following sectors:

Kolkata/ Guwahati/ Lilabari & v.v. – 4 flights per week

Kolkata/ Guwahati/ Tezpur & v.v. – 3 flights per week

Kolkata/ Shillong/ Kolkata – 6 flights per week

With Diu Administration, Alliance Air operates flights on Mumbai/ Diu/ Mumbai sectors – 4 flights per week with ATR72 aircraft.

With Lakshadweep Administration, Alliance Air operates flights on Kochi/ Agatti/ Kochi sectors and Bangalore/ Kochi/ Agatti & v.v. sectors with ATR72 aircraft

The objective of Regional Connectivity Scheme, UDAN (Ude Desh ka Aam Naagrik) is to enhance air passenger traffic in the country by stimulating demand on regional routes. Amount collected as Regional Connectivity Fund (RCF) will be used to provide financial support to airlines in the form of Viability Gap Funding (VGF) for operations under the Scheme. As per the directions of MoCA, RCF will be funded by a small levy per departure on all domestic flights other than the ones on Category II / Category IIA routes under RDG, RCS Routes and aircraft having maximum certified takeoff mass not exceeding 40,000 kg.

The RCF would channel funds generated from the sector to stimulate further growth and development of the sector itself. A part of the fund will also be contributed to by the states that have signed the UDAN MoU: as of date, 19 states have either signed or given their consent.

The national scheduled airlines providing services on domestic routes where such fee per departure is levied would also be eligible under the Scheme to avail benefits of RCS. Similarly, even the passengers would be benefited through additional connectivity on regional routes at prices which are at or below the airfare caps. Thus, the funds collected from national scheduled airlines will (i) benefit the same airlines and passengers from whom it is collected and (2) is further expected to lead to creation of regional air connectivity / services that would have spin-off benefits within the sector in terms of passengers taking other flights (not under RCS) and using airports / airport services that are not at concessional rates under RCS. The amount collected under the levy will be ploughed back into the sector.

 

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