The government has selected 73 airports and Heliports across the country for regional connectivity programme UDAN. This is the first time that helicopter operations are bringing under UDAN. These locations are awarded to various airlines in accordance with applications submitted.
Distant locations like Kragil in J&K, Tezu in Arunachal Pradesh have been brought under the connectivity programme. Connectivity from Porbandar to Ahmedabad, Hubli to Chennai, Darbhanga to Mumbai etc are part of the new round.
As per UDAN scheme, airlines have to offer at least 50% of the seats on the flights at a low price whereas the rest can be offered at market price. The uneconomical component of the programme is supported by the government through viability gap funding.
In the first round of the UDAN, the government allocated nearly Rs 620 cores for viability gap funding. For the second round, the amount is expected to be Rs 213 crores.
Backgrounder: UDAN
The Civil Aviation Policy brought out a Regional Air Connectivity Scheme (RCS or the Scheme) or UDAN to connect tier III and Tier IV cities through air services. The scheme was launched by PM Modi on 28th of April 2017. The first UDAN flight started operations last month flying from Shimla to the national capital.
Objective of the RCS (UDAN)
The primary objective of RCS is to facilitate / stimulate regional air connectivity by making it affordable. RCS here tries to support airline operators through:
(1) Concessions by Central Government, State Governments/UTs and airport operators to reduce the cost of airline operations on regional routes / other support measures and
(2) Financial (viability gap funding or VGF) support to meet the gap, if any, between the cost of airline operations and expected revenues on such routes. State governments have to bear 20% towards VGF (10% for NE States).
The operation of the Scheme is proposed to be through a market mechanism where operators will assess demand on routes; submit proposals for operating / providing connectivity on such route(s). They can seek VGF, if any, while committing to certain minimum operating conditions; and the same shall be finalized in interaction with other market participants as provided for in this Scheme.
In the first round of UDAN bidding, five airlines won bids to operate 128 routes connecting 70 airports. Out of this, 31 are un-served.
The second round of the UDAN Project has got 141 proposals for 502 routes. There were 17 applicants.
