11 Airports in Jammu & Kashmir and 2 in Ladakh for Bidding in UDAN 4.0

by Suman Gupta

Additional VGF offered for Priority Sectors Under UDAN 4.0

New Delhi, 5^th December 2019: The Ministry of Civil Aviation (MoCA) announced the commencement of the bidding process under UDAN 4.0 on 3rd December 2019 with a focus on the NER, Hilly States, J&K, Ladakh, and Islands. Under UDAN 4.0, MoCAhas put on offer bids for 11 unserved airports in the Jammu and Kashmir and 2 underserved airports in Ladakh region. The objective is to establish strong air connectivity and to boost the tourism sector. Under the UDAN 4.0 scheme MoCA is also providing additional VGF of around 25% extra to the airlines.

Airports available for bidding under UDAN 4.0 in J&K and Ladakh are below:

• Airports available for bidding in Ladakh – Kargil and Thoise

• Airports available for bidding in Jammu & Kashmir – Akhnur, Chamb, Chushal, Fukche, Gurex, Jhangar, Miran Sahib, Panzgam, Poonch, Rajouri&Udhampur

Other incentives to the airlines:

• Excise Duty at the rate of 2% only shall be levied on Aviation Turbine Fuel (ATF), drawn by Selected Airline Operators at RCS Airport(s) for RCS Flights, for three (3) years from the date of notification. Upon transition to GST, rates will be applicable as determined under GST and exemptions/ concessions shall be given as permissible so that such a reduced level of taxation could ideally be continued.

• Selected Airline Operators will have the freedom to enter into code-sharing arrangements with domestic as well as international airlines pursuant to applicable regulations and prevailing air service agreements. For the avoidance of doubt, the concessions and VGF under the Scheme shall be available only to the Selected Airline Operator for the RCS Route and shall continue as finalized according to the mechanism outlined under the Scheme.

• Reduction of VAT to 1% or less on ATF at RCS Concession Airports located within the State for a period of ten (10) years from the date of notification. Upon transition to GST, rates will be applicable as determined under GST and exemptions/ concessions shall be given as permissible so that such a reduced level of taxation could ideally be continued.

• Coordinating with oil marketing companies for the provision of fueling infrastructure on a best effort basis.

• Provision of minimum land, if required, free of cost and free from all encumbrances for development of RCS Concession Airports and also provide multi-modal hinterland connectivity (road, rail, metro, waterways, etc.) as required.

• Provision of security and fire services free of cost at RCS Concession Airports through appropriately trained personnel and appropriate equipment as per applicable standards and guidelines by relevant agencies.

• Provision of, directly or through appropriate means, electricity, water and other utility services at substantially concessional rates at RCS Concession Airports.

• Revision of (Viability Gap Funding) VGF cap – The provision of VGF for Category 2 / 3 aircraft (more than 20 seater) has been enhanced for operation of RCS flights in Priority Area(s) (Union Territories [UT] of Ladakh and Jammu & Kashmir; the States of Himachal Pradesh, Uttrakhand, North Eastern State; UT of Lakshadweep and Andaman & Nicobar). The VGF cap applicable for various stage lengths for operation through category 1 / 1 A aircraft (below 20 seater) has also been revised to further incentivize the operation of small aircraft under the Scheme.

• VGF will be provided for RCS Flights for a period of three (3) years from the date of commencement of RCS Flight operations on any RCS Route under a Selected Airline Operator

• State Governments, at their discretion, may consider extending any additional support (such as marketing support) for promotion of RCS Flights.

Concessions offered by the airport / Water Aerodrome / Helipad operators are as follows:

• Airport / Water Aerodrome / Helipad operators (whether under the ownership of the AAI, State Governments, private entities or the Ministry of Defence, Government of India) shall not levy Landing Charges and Parking Charges or any other charge subsuming a charge for such aspects in future on RCS Flights including ASF / UDF charges among others.

• Selected Airline Operators shall be allowed to undertake ground handling for their RCS Flights at all airports / Water Aerodromes / Helipad.

• AAI shall not levy any Terminal Navigation Landing Charges (TNLC) on RCS Flights.

• Route Navigation and Facilitation Charges (RNFC) will be levied by AAI on a discounted basis @ 42.50% of Normal Rates on RCS Flights. Normal Rates refer to applicable rates specified by the AAI on its website from time to time without any discounts or concessions

MoCA aims to operationalize 1000 routes and more than 100 airports in the next five years. This would be achieved by focusing on operationalizing routes in Priority Areas. AAI would focus on developing the no-frills airport in the future and routes connecting such airports would be prioritized for the award of VGF. The market would be incentivized to develop short-haul routes only, providing connectivity to nearby airports.