Five airlines have won bids to operate 128 routes, that will connect 70 airports including 31 unserved ones like Shimla, Bathinda and Jaisalmer, and 12 underserved airports like Kullu.
Bringing Tier 2 and Tier 3 into the country’s aviation network is a significant development in a country where 80% of air travel is between the metros.
The scheme will foster regional connectivity, make businesses and trade more efficient, enable medical services and promote tourism.
How the government convinced airlines?
A major reason for the poor regional air connectivity in India is that airlines do not find it lucrative to operate from small cities.
The government has tried to address this concern by a clever combination of subsidies and fare caps.
All the airlines that participated in Thursday’s reverse bidding for the subsidy accepted the fare caps set by the government.
The money for the subsidy will be raised through a levy on flights operating on major routes like Delhi and Mumbai.
Funding this corpus (Rs 205 crore from this levy) could mean a levy of around Rs 50 for a passenger on flights on major routes.
The subsidy will be in place for three years for an airline that has won the bid on a UDAN route.
There will be other benefits, including no airport charges (airport expenses constitute 25 – 30% of operating costs).
What are some of the challenges?
There are fears that a flight from an UDAN location will be low priority for air traffic controllers in big cities.
Airports in many Tier 2 and Tier 3 cities do not have big runways, so they can’t take regular aircraft.
That means airlines will need to induct smaller aircraft for short takeoffs and landings.
Such aircraft needs specialised crew.
India produces 200 to 300 pilots every year, and it’s safe to say that training specialised crew will take time.
The government should give serious thought to these issues if its well-intentioned scheme of regional connectivity is to become a success.
