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UDAN Regional Connectivity Scheme

Context:

The Regional Connectivity Scheme (RCS) – UDAN (Ude Desh Ka Aam Nagrik), a government-backed initiative to improve infrastructure and connectivity in India, especially in remote and underserved regions, completes six years.

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.

June 2024
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