IndiGo is the largest and profitable airline in India.

AFP/New Delhi

New Delhi on Friday announced a plan to make air travel affordable for millions more Indians, with schemes to revive ailing airports and connect rural areas that it said would "take flying to the masses".

The long-awaited draft policy aims to bring down airfares to 2,500 rupees ($40) per hour of flying on many regional routes through a slew of tax incentives, subsidies and a 2% levy on international and some domestic routes.

It outlines plans to revive India's dilapidated airports and airstrips, of which only about 75 out of 476 are in use, build "no-frills" airports and set up a fund to improve access to rural areas.  

"The prime minister has said... it should be a policy which takes flying to masses, it should no longer confine flying only to the elite," Secretary for Civil Aviation Rajiv Nayan Choubey told reporters.

"We should promote regional connectivity in a manner which makes it possible for the ordinary middle-class Indian to start flying," Choubey said, adding the scheme would start in April 2016.

"We will be giving several incentives in order to bring down the cost of flying as much as we can."

Only 70mn of India's 1.2bn citizens flew domestically in the year to March, according to the Sydney-based Centre for Asia-Pacific Aviation, making it one of the world's most under-penetrated markets.

The draft policy, which looks to overhaul rules dating back to the 1930s, has been submitted to aviation stakeholders for review.

The industry has criticised the government for failing to carry out aviation reforms. With the exception of budget carrier IndiGo, most domestic airlines are suffering losses and mired in debt.

The government is also considering scrapping or amending the "5-20 rule", which requires local airlines to operate for five years and have a fleet of at least 20 planes before they can fly internationally.

However, some Indian airlines are opposed to scrapping the rule, saying it would favour cash-rich international airlines coming into the domestic market.