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Challenges Faced by UDAN Regional Connectivity Scheme

Context:

UDAN, a Regional Connectivity Scheme (RCS) of the Ministry of Civil Aviation is facing challenges due to many airports built under the scheme not being able to be operationalized. Despite the claims of building 74 airports, only 11 greenfield airports have become operational since May 2014.

Relevance:

GS II: Government policies and Interventions

Dimensions of the Article:

  1. About Ude Desh Ka Aam Naagrik (UDAN)
  2. Different Phases of the Scheme:
  3. Objectives
  4. Performance of the UDAN Scheme: Enhancing Air Connectivity

About Ude Desh Ka Aam Naagrik (UDAN):

Nodal:  Ministry of Civil Aviation (MoCA)

  • It is a regional airport development and “Regional Connectivity Scheme” (RCS) of the Union Government of India.
  • The scheme envisages providing connectivity to un-served and under-served airports of the country through the revival of existing airstrips and airports.
Funding Pattern for the Scheme

Concession by Central Government, State Governments/UTs, and Airport Operators:

  • The scheme aims to reduce the cost of operations on regional routes.
  • The Central Government, State Governments/UTs, and airport operators will provide concessions to airlines operating on these routes.

Financial Viability Gap Funding (VGF) Support:

  • VGF support will be provided to bridge the gap, if any, between the cost of airline operations and expected revenues on regional routes.
  • The VGF will be a joint effort between the Ministry of Civil Aviation and the respective State Government.

VGF Sharing Ratios:

  • The VGF support will be shared between the Ministry of Civil Aviation and the State Government in a ratio of 80:20.
  • For States in the North-Eastern region and Union Territories, the VGF sharing ratio will be 90:10.

Different Phases of the Scheme:

UDAN 1.0

  • Under this phase, 5 airlines companies were awarded 128 flight routes to 70 airports (including 36 newly made operational airports)

UDAN 2.0

  • In 2018, the Ministry of Civil Aviation announced 73 underserved and unserved airports.
  • For the first time, helipads were also connected under phase 2 of UDAN scheme.

UDAN 3.0

Key Features of UDAN 3 included:

  • Inclusion of Tourism Routes under UDAN 3 in coordination with the Ministry of Tourism.
  • Inclusion of Seaplanes for connecting Water Aerodromes.
  • Bringing in a number of routes in the North-East Region under the ambit of UDAN.

UDAN 4.0:

  • The 4th round of UDAN was launched in December 2019 with a special focus on North-Eastern Regions, Hilly States, and Islands.
    • The airports that had already been developed by Airports Authority of India (AAI) are given higher priority for the award of VGF (Viability Gap Funding) under the Scheme.
    • Under UDAN 4, the operation of helicopter and seaplanes is also been incorporated.

UDAN 5.0 Scheme

 The 5th round of the scheme has introduced several changes, including:

  • Focus on Category-2 and Category-3: The current round of the scheme is targeted towards Category-2 (20-80 seats) and Category-3 (>80 seats) aircraft.
  • No restriction on stage length: The earlier cap of 600 km on stage length has been waived off, allowing airlines to operate flights on any distance between the origin and destination.
  • Increased Viability Gap Funding (VGF) cap: The VGF to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas, which was earlier capped at 500 km.
  • Shorter deadline for commencement of operations: Airlines would be required to commence operations within 4 months of the award of the route. Earlier this deadline was 6 months.

Objective:

  • To create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man even in small towns.
  • To stimulate regional air connectivity and making air travel affordable to the masses.
  • The scheme envisages providing connectivity to un-served and underserved airports of the country through the revival of existing air-strips and airports. The scheme is operational for a period of 10 years.
  • UDAN is a market driven ongoing scheme where bidding rounds are conducted periodically for covering more destinations/stations and routes under the scheme.
  • Interested airlines assess the demand on particular routes connecting these airports and submit their proposals at the time of bidding.

Performance of the UDAN Scheme

Growth in Connected Airports:

  • Before the launch of the UDAN Scheme, India had only 76 airports connected by scheduled commercial flights since 1911.
  • Since 2014, the number of operational airports has significantly increased to 141, demonstrating substantial growth in air connectivity.

Expansion of Routes:

  • The UDAN Scheme has initiated 479 new routes, creating a network that reaches various regions across the country.
  • As a result, air connectivity has been extended to more than 29 States and Union Territories, connecting previously underserved areas.

Passenger Outreach:

  • The UDAN Scheme has had a notable impact on passenger accessibility and convenience.
  • Over one crore passengers have availed the benefits of this scheme, enjoying improved air travel opportunities and enhanced connectivity.

Challenges to the RCS Scheme:

Commercial Viability of Routes:

  • Some routes identified under UDAN are commercially unviable for airlines due to low demand, affecting profitability.
  • 225 out of 479 launched routes have ceased operations.

Inadequate Airport Infrastructure:

  • Remote regions lack adequate airport infrastructure, posing challenges for airlines.
  • Upgradation and improvements are required to meet safety standards and handle increased air traffic.

Viability Gap Funding Issues:

  • Subsidies and viability gap funding provided to airlines on selected routes faced challenges as some routes remained commercially unviable.

High Operating Costs:

  • Airlines operating in remote areas face higher operating costs, including increased fuel expenses, maintenance costs, and logistical challenges.

Cap on Airfares:

  • The cap on airfares for RCS flights can impact airlines’ revenue potential, discouraging them from operating on certain routes.

Lack of Awareness:

  • Limited awareness among potential passengers about air travel options under UDAN can limit demand and utilization of regional air services.

Way Forward for UDAN Regional Connectivity Scheme:

  • Government, aviation industry stakeholders, and local authorities should work together to address the challenges and find effective solutions.
  • Invest in improving airport infrastructure in remote regions to handle increased air traffic and ensure safety standards.
  • Ensure timely and efficient disbursement of subsidies and viability gap funding to airlines operating on selected routes.
  • Identify and address operational challenges faced by airlines, such as high operating costs and logistical issues.
  • Launch awareness campaigns to inform potential passengers about the availability and benefits of regional air travel under UDAN.
  • Regularly monitor and evaluate the performance of routes and airports to identify any issues and make necessary improvements.
  • Encourage innovation in the aviation sector to find innovative solutions to enhance connectivity and reduce operational costs.
  • Re evaluate the airfare cap for RCS flights to strike a balance between affordability and airlines’ revenue sustainability.

-Source: The Hindu


February 2024
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