The Ministry of Civil Aviation launched a new scheme called UDAN as the Ministry’s regional connectivity scheme. UDAN or Ude Desh Ka Aam Naagrik is a scheme meant for the common man who dreams of flying at an affordable price.
What is it?
UDAN is an innovative scheme to develop the regional aviation market. It has a unique market-based model to develop regional connectivity. The mechanism in this is that the airlines will bid for seat subsidies.
Why such a scheme?
This scheme will create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man even in small towns.
How will it work?
Interested airline and helicopter operators can start operations on hitherto un-connected routes by submitting proposals to the Implementing Agency. All such route proposals would then be offered for competitive bidding through a reverse bidding mechanism.The successful bidder would then have exclusive rights to operate the route for a period of three years. Such support would be withdrawn after a three year period, as by that time, the route is expected to become self-sustainable. The scheme would be in operation for a period of 10 years.
Advantages of the scheme:
- The scheme will ensure affordability, connectivity, growth and development.
- It would provide a win-win situation for all stakeholders – citizens would get the benefit of affordability, connectivity and more jobs.
- The Centre would be able to expand the regional air connectivity and market.
- The state governments would reap the benefit of development of remote areas; enhance trade and commerce and more tourism expansion.
- For incumbent airlines there is the promise of new routes and more passengers
- For start-up airlines there is the opportunity of new, scalable business.
- Airport operators will also see their business expanding as would original equipment manufacturers.
- The selection of airports where UDAN operations would start would be done in consultation with State Government and after confirmation of their concessions.
- Revival of dysfunctional airports and starting operations on un-served airports has been a long standing demand of most States and this will be addressed through UDAN to a large extent.
- Through introduction of helicopters and small aircraft, it is also likely to significantly reduce travel timings in remote and hilly regions, as well as islands and other areas of the country.
- It is likely to a give a major fillip to tourism and employment generation in the country.
- The allocations under the scheme would be equitably spread across the five geographical regions of the country viz. North, West, South, East and North-east.
The fare for a one hour journey of approximately 500 km on a fixed wing aircraft or for a 30 minute journey on a helicopter would be capped at Rs. 2,500, with proportionate pricing for routes of different lengths and duration.
A Regional Connectivity Fund would be created to meet the viability gap funding (VGF) requirements under the scheme.
The selected airline operator would have to provide a minimum of 9 and a maximum of 40 UDAN Seats at subsidized rates on the UDAN Flights for operations through fixed wing aircraft and a minimum of 5 and a maximum of 13 Seats on the Flights for operations through helicopters.
On each such route, the minimum frequency would be three and maximum of seven departures per week. Route networks would also be encouraged under the scheme to achieve economies of scale and optimal usage of aircraft.
The States have a key role under the scheme. Hence it is a step towards cooperative federalism. The Ministry hopes that the first flight under the scheme would be able to take off by January next year. The scheme has been prepared after a lot of stakeholder consultation and called for support from all players to make it a success.