FIA withdraws lawsuit challenging Udan cess2 min read . Updated: 10 Oct 2017, 03:10 AM IST
Lobby group Federation of Indian Airlines withdraws a lawsuit challenging the govt‘s decision to impose a cess to fund its regional connectivity scheme Udan
New Delhi: Lobby group Federation of Indian Airlines (FIA) withdrew a lawsuit challenging the government’s decision to impose a cess to fund its regional connectivity scheme Udan.
FIA, which counts SpiceJet Ltd, InterGlobe Aviation Ltd-run IndiGo, Jet Airways (India) Ltd and GoAir as its members, had filed the lawsuit late last year.
“Everybody understands the importance of Udan and the first round of Udan has proved to be quite successful and we had several conversations with the government and we thought that it was in the best interest of the system that FIA take back the case," SpiceJet chairman Ajay Singh said in an interview on the sidelines of the World Economic Forum in New Delhi on Friday.
Udan—or Ude Desh Ka Aam Nagrik, loosely translates as “let the common man fly". Under the original plan, airlines would have had to pay Rs7,500 for every flight up to 1,000km, Rs8,000 for those between 1,000 and 1,500km and Rs8,500 above 1,500km. This would have brought in about Rs400 crore annually to the government which were to be ploughed back to airlines to fly to remote towns.
FIA had said these charges were too high and had filed a petition in the Delhi high court saying the ministry of civil aviation did not have the authority to introduce the levy in this manner and the cess will be a huge financial burden on airlines.
The aviation ministry and FIA have had several rounds of discussions since then and have reached an understanding.
Not only has the burden been reduced to just Rs5,000 per flight, the government has also allowed the airlines to have easier network norms under the Udan scheme.
Given the difference of opinion, most airlines had not released funds to the government for Udan so far. Now they will, Singh said.
FIA did not respond to an email seeking comment.
Five airlines—Air India, SpiceJet, Turbo Megha, Air Odisha and Air Deccan—were allotted 128 routes to fly in the first round of Udan in March. About 20 of these routes have been connected so far.
Air Deccan and Air Odisha have also applied for commuter airline licences to operate flights. Both are being processed.
InterGlobe Aviation and Jet Airways (India) Ltd, which had not participated in the first round of Udan, are likely to participate in the upcoming round this winter.
“It seems they achieved what they wanted: lower tax, subsidized routes and add-on segments with larger aircraft," said Steve Forte, a former chief executive of Jet Airways. “No real reason to continue arguing".