Government is soon trying to reach the milestone of 1000 regional connectivity routes under ‘Ude Desh ka Aam Naagrik’ or UDAN scheme. In the upcoming months, Government will allot new routes under the programme, primarily to northeastern states, India’s islands or other hills. The government wants to ensure connectivity to such regions through air travel.
Scaling up subsidized regional connectivity will boost the tourism of the country. Government has kept a target to improve the scale of air travel in the country to one billion passengers a year in 15-20 years. In 2016-17, the passenger count was 265 million.
Subsidies and financial assistance for airlines to fly under UDAN scheme
Both centre and state government will provide various subsidies to make UDAN successful. The airlines will get viability gap funding and will be waived from the payments of some airport charges. State Government will waive local levies on jet fuel. As an extension to the financial assistance from the Government, the Airports Authority of India (AAI) is reviving unserved and underserved airports of the state governments.
Fourth round of route allocation to begin soon
Government has already completed three rounds of route allocation under UDAN scheme. Around 600 routes are granted to the airlines. In the last round, Government allocated 235 routes to various airlines including IndiGo, SpiceJet, and the now non-functional Jet Airways.
In the fourth round, the priority will be for regions like Jammu and Kashmir, Uttarakhand, Andaman & Nicobar island, Himachal Pradesh, and Lakshadweep island. According to a report by Livemint, airlines are showing a keen interest in UDAN scheme.
In the beginning of October, CNBC-TV18 reported that the Government is likely to invite bids for over 100 routes under UDAN scheme. According to the report, Government may include routes vacated by Jet Airways, and those routes cancelled by Zoom Air, Air Odisha, Deccan Charter, etc. for the bids. Some routes did not get any bids in the last round of UDAN route allocation. It is estimated that only 30% of the routes allotted under UDAN are operational now.
The aviation industry faces several challenges, including the jet fuel price, competitions, players from abroad, and volatility in currency rates.