Executive Summary:
The Ministry of Civil Aviation addresses concerns regarding exorbitant airfares and the potential for government regulation. Airfares are not regulated but monitored to ensure compliance with existing rules. The Regional Connectivity Scheme (RCS) Ude Desh ka Aam Nagrik (UDAN) provides connectivity to unserved and underserved airports through Viability Gap Funding (VGF) to airlines, with the total VGF disbursed since 2017-18 being Rs. 4159.73 Crore.
Key Points / Main Content:
* **Airfare Regulation and Monitoring:**
* The Government does not regulate airfares; airlines set prices based on operational needs, adhering to Rule 135 of the Aircraft Rules, 1937.
* Airfares are subject to dynamic fluctuations based on supply and demand, seat occupancy, fuel costs, aircraft capacity, and competitive factors.
* The Ministry sensitizes airlines to exercise moderation and self regulation and adopts measures like increase in the number of flights and reallocating capacity.
* The DGCA's Tariff Monitoring Unit (TMU) monitors airfares on 78 selected routes monthly to ensure airlines adhere to declared fare ranges under Rule 135.
* **Regional Connectivity Scheme (RCS) - UDAN:**
* RCS-UDAN aims to connect unserved and underserved airports, promoting tourism, employment, and regional growth.
* 637 RCS routes have been operationalized, connecting 92 unserved and underserved airports, including heliports and water aerodromes.
* Airfares on RCS seats are supported by Viability Gap Funding (VGF) for a 3-year tenure.
* **Viability Gap Funding (VGF) Disbursement:**
* VGF is provided to Selected Airline Operators (SAOs) to compensate for low airfares under the RCS-UDAN scheme.
* The total VGF disbursed to airlines from 2022 to 2025 is detailed in Annexure, with a total of Rs. 2346.48 Crore.
* The total VGF disbursed to airlines since 2017-18 is Rs. 4159.73 Crore.
Impact Analysis:
* **Airlines:**
* *Impact:* Airlines retain the flexibility to determine airfares based on operational needs but are subject to monitoring by the DGCA to ensure compliance with fare range declarations. Airlines operating under the RCS-UDAN scheme receive VGF to compensate for lower airfares on designated routes.
* *Action Required:* Adhere to Rule 135 of the Aircraft Rules, 1937 when determining airfares. Cooperate with the DGCA's Tariff Monitoring Unit (TMU) and ensure fare transparency. For SAOs, comply with RCS-UDAN guidelines and utilize VGF effectively.
* **Passengers:**
* *Impact:* Passengers may experience fluctuating airfares based on market dynamics. The RCS-UDAN scheme aims to make air travel more accessible and affordable to underserved regions through subsidized fares.
* *Action Required:* No direct action required, but passengers can benefit from increased connectivity and potentially lower fares on RCS-UDAN routes.
* **Government (Ministry of Civil Aviation & DGCA):**
* *Impact:* Responsible for monitoring airfares, promoting regional connectivity, and managing the VGF scheme.
* *Action Required:* Continue monitoring airfares through the TMU. Ensure effective implementation of the RCS-UDAN scheme. Oversee the disbursement of VGF to SAOs.
Key Entities Referenced
Ministry of Civil Aviation: The government ministry responsible for civil aviation in India.
Viability Gap Funding (VGF): A scheme by the government to provide financial support to infrastructure projects that are economically justified but fall short of financial viability.
Aircraft Rules, 1937: A set of rules governing aviation operations and airfares in India. Specifically, Rule 135 is mentioned in the context of airfare regulation.
Directorate General of Civil Aviation (DGCA): The regulatory body for civil aviation in India.
Tariff Monitoring Unit (TMU): A unit established by the DGCA to monitor airfares on selected routes.
Regional Connectivity Scheme (RCS): A government scheme to enhance air connectivity to unserved and underserved airports in India.
Ude Desh ka Aam Nagrik (UDAN): A component of the RCS scheme focused on making air travel accessible to the common citizen.
Pahalgam, Jammu and Kashmir: A town in the Anantnag district of Jammu and Kashmir, India. Mentioned in the context of surge in air fare.
GOVERNMENT OF INDIA
MINISTRY OF CIVIL AVIATION
Lok Sabha
UNSTARRED QUESTION NO. : 2007
( TO BE ANSWERED ON THE 31st July 2025 )
VIABILITY GAP FUNDING
2007. SHRI Y S AVINASH REDDY
Will the Minister of CIVIL AVIATION
be pleased to state:-
(a) whether the Government has taken note of the exorbitant airfares
being charged by the airlines;
(b) if so, the details thereof;
(c) whether the Government has any plans to cap these airfares to make
air travel accessible and affordable for all and if so, the details thereof;
and
(d) the total amount paid to airlines under Viability Gap Funding (VGF) to
compensate for low airfares, year and airline-wise?
ANSWER
Minister of State in the Ministry of CIVIL AVIATION (Shri
Murlidhar Mohol)
(a) to (c) Airfares are not subject to regulation by the Government and
airlines have the flexibility to determine their airfares based on their
operational needs, while adhering to Rule 135 of the Aircraft Rules, 1937.
The pricing of airfares is subject to dynamic fluctuations influenced by the
fundamental economic forces of supply and demand. Various determinants
such as current seat occupancy, fuel costs, aircraft capacity, and
competitive factors significantly impact airline ticket pricing.;
;
To ease surge in air fare, Ministry remains vigilant and sensitize airlines to
exercise moderation/ self- regulation, measures like increase in the
number of flights, reallocating capacity, etc. are adopted as done during
Pandemic, festivals, Mahakumb and Pahalgam Incident.;
In order to enhance the transparency in airfare, DGCA has set-up Tariff
Monitoring Unit (TMU) that monitors airfares on selected 78 routes on a
random basis by using airlines websites on monthly basis to ensure that
the airlines do not charge airfares outside the range declared by them,
under the provision of sub-rule (2) of Rule 135 of the Aircraft Rules, 1937.
This covers about 27% of the domestic traffic.;
;
(d) The Regional Connectivity Scheme (RCS) - Ude Desh ka Aam Nagrik
(UDAN) envisages providing connectivity to un-served and underserved
airports of the country through revival of existing air strips and airports,
which in turn also promotes tourism, increase employment opportunities
and regional growth across the country.;
;
637 RCS routes connecting 92 unserved and underserved airports,
including 15 heliports and 2 water aerodromes have been operationalized
under the scheme.The airfare on the RCS seats on which VGF is provided
to the Selected Airline Operators (SAOs) is for a 3-year tenure.;
;
The total amount paid to airlines under Viability Gap Funding (VGF), year
and airline-wise is placed at Annexure.;
******VGF Disbursed to Airlines
(figures in Rs. Crore)
Sl 2022- 2023- 2024- 2025-
No. 23 24 25 26 Total
ALLIANCE AIR 177.54 130.05 97.47 16.16 421.22
1.
AIR TAXI 0 3.75 14.75 3.73 22.23
2.
BIG CHARTERS 86.63 64.52 54.26 13.95 219.36
3.
GHODAWAT 75.17 116.76 186.68 33.02 411.63
4.
GSEC MONARCH 5.94 16.83 23.46 4.04 50.27
5.
HERITAGE 12.78 15.22 26.19 3.91 58.1
6.
INDIGO 298.61 296.98 107.79 0 703.38
7.
PAWAN HANS 25.5 32.52 21.21 5.03 84.26
8.
SPICEJET 116.17 129.99 26.89 18.71 291.76
9.
Just Udo Aviation P. 84.27
0 0.4 69.26 14.61
10.
Ltd.
2346.4
Total 798.34 807.02 627.96 113.16
8
*Total VGF disbursed to airlines since 2017-18 is Rs. 4159.73 Crore.
*****