The problems within the UDAN scheme

• IAS NEXT, Lucknow
• 23, Dec 2021

Reference News-

So far, the AAI has awarded 948 routes under UDAN, of which 403 routes have taken off that connect 65 airports and 8 heliports. However, some of the routes launched have discontinued.

• This was because of the failure to set up airports due to lack of availability of land, airlines finding the routes difficult to sustain, and adverse impact of the COVID-19 pandemic.
• Poor financial health of many smaller, regional carriers have been a bane for the scheme.

About UDAN scheme (Ude Desh Ka Aam Nagrik) Scheme:

• The scheme is aimed at enhancing connectivity to remote and regional areas of the country and making air travel affordable.
• It is a key component of Centre’s National Civil Aviation Policy led by Prime Minister Narendra Modi and launched in June 2017.
• It is also known as the regional connectivity scheme (RCS) as it seeks to improve air connectivity to tier-2 and tier-3 cities through revival of unused and underused airports.
• Under the scheme, nearly half of the seats in Udan flights are offered at subsidised fares, and the participating carriers are provided a certain amount of viability gap funding (VGF) – an amount shared between the Centre and the concerned states.
• The scheme will be jointly funded by the central government and state governments.
• The scheme will run for 10 years and can be extended thereafter.

Key features of the scheme:

1. Airlines are awarded routes under the programme through a bidding process and are required to offer airfares at the rate of ₹2,500 per hour of flight.
2. At least 50% of the total seats on an aircraft have to be offered at cheaper rates.
3. In order to enable airlines to offer affordable fares they are given a subsidy from the Government for a period of three years.
4. The Government had also earmarked ₹4,500 crore for revival of 50 airports in the first three years.

UDAN 4.0:

• The 4th round of UDAN was launched in December 2019 with a special focus on North-Eastern Regions, Hilly States, and Islands.
• The airports that had already been developed by Airports Authority of India (AAI) are given higher priority for the award of VGF (Viability Gap Funding) under the Scheme.
• Under UDAN 4, the operation of helicopters and seaplanes is also been incorporated.

What have been the challenges?

• Poor financial health of many smaller, regional carriers have been a bane for the scheme.
• Many players don’t have more than one or two planes and they are often poorly maintained. New planes are too expensive for these smaller players.