The Central government has proposed widening the scope of its UDAN scheme for regional connectivity by making more flight operations eligible for a host of concessions, including viability gap funding. Soon, all routes which do not have flight services at present may become part of the Scheme.
“If there is no flight between two destinations even though both the airports have flight operations on separate routes, then it will be an unserved route falling under the regional connectivity scheme (RCS),” civil aviation secretary R.N. Choubey said, while announcing proposals that may be incorporated in its UDAN scheme ahead of the second round of bidding that may take place in July. The Centre has invited stakeholders’ comments on its proposal and will finalise the RCS by June 30.
For instance, airlines operating on Lucknow-Varanasi route may be eligible for concessions under the UDAN scheme as there are no flights on the route at present although there are flights operating out of these airports to other destinations. However, to be eligible, airlines need to participate in the bidding process. At present, only airports that are either categorised as unserved or underserved fall under the Scheme.
The Civil Aviation Ministry has further proposed decreasing the exclusivity on flight operations under the RCS from three years to one year. However, the subsidy to airlines will continue for three years. At present, no other airline, except the one which has won the bid, is allowed to operate on routes awarded under the Scheme.
“The Chief Minister of Maharashtra suggested us informally that it may become difficult to put Shirdi airport, which will commence operations soon, under RCS since only one airline will get to fly from Shirdi airport whereas it has greater potential as per the state government’s assessment and the freedom to operate more flights under the scheme will be lost,” Mr. Choubey said, explaining the rationale behind the move.
He added that “it’s a trade off between maintaining the viability of operations of incumbent airline and the need for more flights to be provided for people of this city for which another airline has come forward without requiring any subsidy.”
The government may also allow flights between airports less than 150 kilometres of distance from each other, for instance Bengaluru-Mysure route, to be eligible to fall under the UDAN scheme.
In a bid to provide “greater flexibility to airlines”, the Centre will lift the restriction of operating a maximum of seven flights a week. Instead, the government may fix a cap on the number of seats which will allow airlines to fly multiple flights a day.
The proposed changes come at a time when the country’s largest airline by market share, IndiGo, announced its plans to participate in the second round of bidding. Routes under the second round of bidding will be awarded by August this year. In its first round, Centre awarded 128 routes connecting 70 airports to five airlines — SpiceJet, Alliance Air, TruJet, Air Deccan and Air Odisha Aviation. Fares under the scheme are capped at Rs 2,500 for an hour’s flight and airlines get subsidy from government for losses incurred as a result of lower airfares.
