GENEVA: The government's plan to charge 2% cess on domestic and international airfares goes against the principles of the International Civil Aviation Organisation (ICAO), global trade organisation International Air Transport Association (IATA) has said.

The association, in its reply to the government's draft civil aviation policy announced in October, opposed the plan to levy cess, among other proposals, said Tony Tyler, director general and CEO of IATA, which has 230 airlines across the world as its members.

"ICAO says cost and charges to the airlines should only be cost related and when the government charges here (airlines) to provide something there (regional connectivity), it goes against the ICAO principles," said Tyler.

In the draft policy, the government announced an ambitious plan to provide regional connectivity between smaller cities in the country at Rs 2,500 per passenger per hour of air travel. It plans to subsidise regional connectivity through a viability gap funding that is to be generated through a 2% cess on airfares.

To achieve the targeted Rs 2,500 fare, the government also plans to provide benefits such as no excise on fuel for regional flights and exemption from service tax, and landing and parking charges.

IATA has also opposed the Rs 2,500 fare, saying there is no scientific basis on which the target price has been arrived at.

"Government intervention in arriving at a price in an industry, which has been able to competitively price its services in the marketplace, is not an efficient strategy -and has the potential of distorting the existing pricing structures as well," IATA said in its response to the draft policy.

Besides, IATA has favoured a complete abolition of the 520 norm, which requires Indian airlines to have an experience of five years of domestic flying and a fleet of 20 aircraft.

"Replacing it through a Domestic Flying Credit (DFC) formula would mean replacing one norm with another, which is probably more complex, does not make any sense," Tyler said.

According to the formula, an airline will need to earn 300 DFC points to be eligible to fly international and these points can be earned by operating domestic flights. IATA has also opposed the government's proposal to auction bilateral air services rights to countries that are within 5,000 km flying distance of Delhi.

The draft policy is being discussed in the civil aviation ministry and final policy will be rolled out by the end of this month.