Business

Centre launches UDAN for regional air connectivity

With the aim of taking flying to the masses, the Centre on Friday unveiled the final regional connectivity scheme known as UDAN.

Airfares will be capped at Rs 2,500 for an hour’s journey on a flight operating to and from a regional airport, under the scheme. The government will provide subsidies to regional airlines to offer half the seats on a discounted rate.

However, the subsidies will mainly be provided by taxing the air passengers on other domestic routes in the form of a “small” levy. The Union civil aviation ministry hasn’t yet disclosed the levy it will charge per departure to big airlines flying on all domestic routes, except remote and north-eastern States.

“Airlines support is very crucial for the scheme. We can have non-functional airports but not non-functional airlines…We are cautiously optimistic about the scheme,” Civil Aviation Minister Ashok Gajapathi Raju said. Leading domestic airlines have termed “illegal” the government’s move to charge a levy on them to fund the regional connectivity scheme. However, Civil Aviation Secretary RN Choubey said that the government didn’t agree with the airlines’ opposition.

Regional airlines can avail subsidies for flying a distance of at least 150 km. In a bid to woo the regional carriers, the subsidy amount has been increased from the draft scheme released earlier this year. Airlines will now get subsidy in the range of Rs 2,350-Rs 5,100 per seat for three years.

“Hawai chappal wale ko bhi hawai jahaz mein hume bithana hai (We want to ensure that even those who wear slippers get to travel by air),” Minister of State Civil Aviation Jayant Sinha said. Centre said it aims to take domestic ticketing to 300 million by 2032 from 80 million a year at present.

The subsidy to airlines will be provided through a reverse bidding process, which means if there is a demand from multiple airlines to fly on regional routes the ones asking for the least financial support will get the subsidy. On routes where a proposal comes from only one airline, the government will give the subsidy based on normative pricing, meaning it will calculate the subsidy amount based on various parameters. Although the window for submission of initial proposal by airlines has been opened up, the reverse bidding process will start in November this year and will take place twice a year.

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Printable version | Apr 10, 2020 1:56:30 AM | https://www.thehindu.com/business/Centre-launches-UDAN-for-regional-air-connectivity/article15638720.ece

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