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Airfares will rise following the levy imposed by the government. Pictured: Representational Image.Reuters file

The central government on Friday announced a levy to fund its regional connectivity scheme. The decision is likely to result in a rise in airfares. 

According to a statement issued by the civil aviation ministry, the government is expected to impose Rs 8,500 levy on flights operating on major routes, which would then be used for funding the air connectivity scheme, the Financial Express tweeted. 

However, the levy will be imposed as per flight and not as per ticket, the government announced.

The central government is hoping to earn Rs 400 crore through the levy, which is being imposed to fund the scheme. For domestic flights between 1,000 km and 1,500 km, the levy will be Rs 8,000. It would be around Rs 8,500 for flights beyond 1,500 km, and Rs 7,500 for those up to 1,000 km, News 18 reported.

In June, the civil aviation ministry had proposed the regional connectivity scheme, which would make flying affordable for the masses, especially in Tier II and Tier III cities at subsidised rates. 

Following the news, shares of all three listed aviation companies fell between 1.90-3 percent during trading hours on Friday. The SpiceJet stock was trading at Rs 64.35 at around 1.38 p.m. on Friday, down 3.16 percent. Similarly, shares of Jet Airways and InterGlobe Aviation (which owns IndiGo) were trading at Rs 431.60 and Rs 915.40 apiece around the same time, down 1.93 percent and 1.99 percent respectively on the Bombay Stock Exchange.

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