The Union Cabinet cleared the Civil Aviation Policy, which is set to open door to a number of passenger-friendly measures including capping of airfares at Rs. 2,500 for an hour-long flight.
The Civil Aviation Ministry had sent the policy for Cabinet’s approval on June 3.
The policy is set to introduce a slew of changes, including the auctioning of unilateral traffic rights, tax incentives for airlines, maintenance and repair works of aircraft besides mooting two per cent levy on all air tickets to fund regional connectivity scheme and providing viability gap funding for airlines to encourage operation on regional routes.
The policy lays focus on regional connectivity with an aim of providing affordable aviation services in Tier-II and Tier-III cities.
Civil Aviation Ministry is planning to bring down the prices of air tickets by giving exemptions including service tax, customs duty, landing and parking fee and VAT.
The government had, for the first time, unveiled the policy draft in November 2014, subsequently replacing it with another in October 2015.
The policy was expected to be finalised in the last financial year as certain proposals were to be implemented from April 1, 2016.