New Delhi: To provide affordable air connectivity to under-connected and unconnected cities in India, the Indian government launched a regional air connectivity scheme in October 2016 called Ude Desh ka Aam Naagrik or UDAN, which in Hindi language means flight. Mint tracks the altitudes the flight soared to and the headwinds it continues to face today.
The take-off
The scheme was launched with an aim to develop the regional aviation market. It envisaged for a market-based mechanism in which airlines bid for seat subsidies and create affordable yet profitable flights on regional routes. While providing connectivity, the scheme aimed to create benefits of enhanced trade and more tourism for state governments, a promise of new routes and more passengers for incumbent airlines, more business for airports, and an opportunity of new, scalable business for startup airlines.
When the scheme was launched, the fare for half the seats for a one-hour journey of around 500 km on a fixed-wing aircraft or a 30-minute journey on a helicopter was capped at ₹2,500 rupees, proportionate pricing for routes of different distances and flight durations.
The airline operator flying under the scheme was to provide half the seats of the flight–minimum of nine and maximum of 40–in a fixed-wing aircraft at a price lower than the specified cap for that sector.
Journey so far
Since the inception of the scheme, the number of domestic airports in India has increased to 132 airports as of July 2023 from 82 airports in 2016, registering a 61% increase. The number of passengers travelled on the UDAN routes increased from around 263,000 in 2017-18 to 2.5 million passengers in 2022-23.
While the broad picture indicates a positive sentiment, the recent audit by Comptroller and Auditor General of India showed that the scheme faces multiple challenges and has not been able to perform to its full potential.
The audit showed that up to UDAN-3, around 52% or 403 out of 774 routes of the awarded routes could not commence operations and from the 371 commenced routes, only 112 routes or 30% completed the full concession period of three years. Further, out of these 112 routes, only 54 routes or 7% of the awarded routes connecting 17 regional Airports could sustain the operations beyond the concession period of three years, as of March 2023.
Out of the 116 airports, heliports, water aerodromes where expenditure was incurred, operations commenced at only 71 or 61% of the airports, heliports, or water aerodromes. Hence, operations could not be commenced or were discontinued at 83 airports, heliports, or water aerodromes even after incurring an expenditure of ₹1,089 crore.
Status check
While the regional connectivity scheme was launched with the intention of promoting regional tourism, the ecosystem still needs to be improved to enable more startup airlines in India catering to remote areas. However, data shows that all four regional carriers that existed in 2016, namely Zoom Air, Air Costa, Air Carnival and TruJet do not exist in 2023. As of July this year, there are only two new regional airlines in India in the form of Star Air and Fly big with a 0.2% market share each in domestic air traffic. State-run Alliance Air has 1% share in the July data.
The CAG audit suggests that the scheme needs an appropriate mechanism to assess the feasibility of routes for achieving the sustainability of operations in the long run and for identification of airports, considering the stage length, availability of alternate mode of transportation, terrain, socio-economic scenario and tourism potential.
Industry experts are of the view that the UDAN scheme needs a balanced scrutiny of all stakeholders involved in order to reap the full benefit for a country that is currently at a penetration rate of 3-4% in terms of air travel.
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