Only 1 of 4 in UDAN routes survive on completion of 3 years

Contact Counsellor

Last Updated06/02/2022

Only one out of four routes under the low-cost flying scheme called UDAN have survived after completing the government's subsidy period of three years, according to information shared by the Ministry of Civil Aviation before a Parliamentary panel.
Of the 94 RCS-Udan routes that have completed 3-year tenure till 30.11.2021, only 22 routes are in operation.

The scheme was launched in 2016 and is also known as regional connectivity scheme (RCS).
The aim of the scheme was to take flying to the masses and improve air connectivity to tier-2 and tier-3 cities.
Under the scheme, airlines have to cap fares at ₹2,500 per seat per hour of flight for 50% of the seats in a plane for which they receive a viability gap funding (subsidy) from the government along with some other benefits.
The government expected that after the expiry of the three-year subsidy period, airlines would be able to sustain the routes without outside support.
The scheme document says the key guiding principle is to encourage ""sustainability of operations under RCS in the long term — such that the connectivity established is not dependent on VGF in perpetuity"".
It also recognises that select areas may need funding support for longer periods.
Under the UDAN Scheme up till now, approval has been given to four phases- UDAN 1, UDAN 2, UDAN 3 and UDAN 4.

Since 2017, there have been seven rounds of bidding for routes during which 948 have been awarded to airlines and helicopter operators.
Of these 403 routes have commenced operations.
Of the 154 unconnected airports (including 14 water-aerodromes and 36 heliports have been identified for operation of RCS flights) planned to be revived, 65 have resumed flights.
The government has also told the parliamentary committee that 300 routes ""have been affected due to poor demand on account of Covid-19 pandemic situation"".
This means that the routes have seen demand plummet in view of which the government has allowed airlines to reduce their frequency to 60%, on the condition that the subsidy too will be cut proportionately.

Difficult airline business which has low yield and high operating costs
Lack of slots at congested airports like Delhi and Mumbai
Non-availability of smaller planes and maintenance issues which require procurement of spare parts from abroad.
Delays in completing airport development work due to lack of funds and non-availability of land.

Stakeholders should work towards making the UDAN scheme sustainable on its own and improve its efficiency.
Airlines should undertake marketing initiatives so that more and more people can take benefit of the UDAN scheme.