New Delhi, April 27: In what can be called a major step towards making flying a reality for the small town common man, Prime Minister Narendra Modi flagged off the first Ude Desh Ka Aam Naagrik (UDAN) flight on Wednesday under the Regional Connectivity Scheme (RCS) in Shimla, Himachal Pradesh. Under the scheme, nearly 50 percent of the seats on every flight will cost Rs 2,500 per seat while the aviation ministry will fund the subsidy by charging a landing fee on airlines operating on the trunk routes. During the occasion, Prime Minister Narendra Modi will flag off three flights on the Shimla-Delhi sector, the Kadapa-Hyderabad and the Nanded-Hyderabad sectors.

The UDAN network will cover the whole country, giving a major economic boost to hinterland areas. The ambitious scheme was launched by the government to provide connectivity to unserved and under-served airports as well as make flying more affordable. The scheme envisages providing connectivity to un-served and under-served airports of the country through the revival of existing airstrips and airports and would be in operation for a period of 10 years.

It also ensures affordability, connectivity, growth and development and is believed to provide a win-win situation for all stakeholders while citizens would get the benefit of affordability, connectivity and more jobs. The Ministry of Civil Aviation (MoCA), Government of India released the National Civil Aviation Policy 2016 (NCAP 2016). One of the objectives of NCAP 2016 is to “enhance regional connectivity through fiscal support and infrastructure development”.

UDAN Scheme- Quick look
Mode of TransportationFlight
FareRs 2500
No. of seats9-40 per user
Total available seats50% of the total seats
Scheme announcementOctober 2016
No of airports to be connected70

The Civil Aviation Ministry had declared the scheme in October 2016.About the UDAN scheme:

  1. Under this scheme, a traveller can buy tickets at Rs 2500 only.This price is valid for one-hour flight journeys only.
  2. A total of 70 airports across India will be connected under this scheme.
  3. A single user can book from a minimum of 9 to maximum 40 seats under this scheme.
  4. The Rs 2500 price is not for all the seats available in the flights. The traveller will get 50% off only if he/she has taken the scheme. If the seats are not booked under the scheme, the traveller will have to pay the price of the ticket as per market rates.
  5. Rs 2500 is the ceiling price under this scheme and no other charges will be levied on this price while availing this offer.
  6. The operators are Air India subsidiary Airline Allied Services, SpiceJet, Air Deccan, Air Odisha and Turbo Megha. They would be operating 19-78 seater aircraft.
  7. 13 airports in Tier II and Tier III cities which did not have many flights in a week will see more flights. The airports that would be connected under UDAN include Bhatinda, Puducherry and Shimla
  8. On each such route, the minimum frequency would be three and maximum of seven departures per week.
  9. Route networks would also be encouraged under the scheme to achieve economies of scale and optimal usage of aircraft.

As the Indian economy grows, consumption-led growth in populated metros is expected to spill over to hinterland areas. In this context, one of the key objectives of NCAP 2016 is to “establish an integrated eco-system which will lead to significant growth of civil aviation sector, which in turn would promote tourism, increase employment and lead to a balanced regional growth”

Union Minister for Civil Aviation, Ashok Gajapathi Raju‏ in a series of tweets gave a detailed description of the UDAN routes. The routes are as follows:

UDAN routes

UDAN routes

UDAN routes

UDAN routes

UDAN routes

Objectives of the Regional Connectivity Scheme (RCS):

The primary objective of RCS is to facilitate/stimulate regional air connectivity by making it affordable. Promoting affordability of regional air connectivity is envisioned under RCS by supporting airline operators through (1) concessions by Central Government, State Governments (reference deemed to include Union Territories as well, unless explicitly specified otherwise) 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.

UDAN

The government has also extended subsidy in the form of viability gap funding to the operators flying on these routes. Fulfilling Narendra Modi’s vision of regional connectivity, Aviation Minister Ashok Gajapathi Raju awarded 128 routes to five operators under the UDAN scheme of the government. On each flight, 50 per cent of the seats would have a cap of Rs 2,500 per seat/hour, Civil Aviation Secretary R N Choubey said. Under UDAN, the operators would be extended viability gap funding. The amount is estimated to be around Rs 205 crore per annum for the operators chosen in the first round of bidding, Choubey added.

UDAN

Meanwhile, the Central Government would provide concessions in the form of reduced excise duty, service tax, permission to trade ASKMs for Non-RCS (UDAN) Seats and flexibility of code sharing at the RCS (UDAN) airports. A Regional Connectivity Fund would be created to meet the viability gap funding requirements under the scheme. The RCF levy per departure will be applied to certain domestic flights.

Moreover, as per a PIB release, the State governments will have to lower the VAT on ATF to 1% or less, besides providing security and fire services free of cost and electricity, water and other utilities at substantially concessional rates. The airport operators shall not impose Landing and Parking charge and Terminal Navigation Landing Charges in addition to discounts on Route Navigation Facility Charges.  The partner State Governments (other than North Eastern States and Union Territories where the contribution will be 10 %) would contribute a 20% share to this fund.

For a balanced growth across the nation, the allocations under the UDAN scheme would be equitably spread across the five geographical regions of the country namely North, West, South, East and North-east.  The UDAN Scheme is likely to a give a major fillip to tourism and employment generation in the hinterland. With the introduction of helicopters and small aircraft in the aviation sector, it is also likely to significantly reduce travel timings in remote and hilly regions, as well as islands and other areas of the country.