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New navigation charges to benefit domestic airlines

Our Bureau

While the decision is likely to lead to a reduction in costs by 20-25 per cent for the domestic airlines, it is unlikely to see any reduction in airfares.

NEW DELHI, July 19

IN a move that will benefit the domestic air operators, the Government is to change the Route Navigation Facility Charges (RNFC) from October 1 this year. Airlines pay RNFC for being guided safely through the Indian air space.

"From October 1 this year, RNFC rates will be charged on the basis of aircraft weight and the travel distance. The move will help airlines from both domestic and the neighbouring countries, including Singapore," the Joint Secretary, Ministry of Civil Aviation, Mr V. Subramanian, said on Friday.

While the decision is likely to lead to a reduction in costs by 20-25 per cent for the domestic airlines, it is unlikely to see any reduction in airfares. Further, it will be a revenue-neutral move for the Airports Authority of India (AAI).

"While the RNFC rates for domestic airlines will come down, international airlines overflying India will have to pay more as India has a very large air navigation space which extends from near Mauritius to Singapore," officials said. IA sources said that the new RNFC rates were likely to help the airlines save around Rs 20 crore annually.

"During this year the saving for IA will be half of Rs 20 crore as the changes are scheduled to come into effect only from October 1," sources said. However, the major domestic airlines when contacted felt that the decision was unlikely to lead to any lowering of airfares.

"For airfares to come down it is absolutely essential that the price of aviation turbine fuel (ATF) comes down. The changes in RNFC will help the airlines somewhat but it is still unclear as to what the financial impact will be," an airline official said.

During 2000-01, sources said that IA alone paid Rs 120.6 crore, up from close to Rs 100 crore in the previous year towards RNFC charges while the ATF bill was Rs 920 crore, up from more than Rs 677 crore for the state-owned carrier.

Meanwhile, an official of a South Asian airline operating to India said that the decision would benefit the carrier especially as Indian RNFC charges were very high.

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