Monday, May 08, 2017

How PM Narendra Modi’s UDAN scheme provided small-town India with wings

When Prime Minister Narendra Modi flagged off the first flight under the Regional Connectivity Scheme (RCS) from Shimla late last month, he may have set into motion an exercise that alters the aviation horizons in the country, not only making air travel affordable for millions of Indians in tier-3 and tier-4 cities, but also building vital infrastructure for the economy in the process.
In the first round of bidding under RCS (UDAN in Hindi) which got over in January, two scheduled commercial airlines – Air India and Spice Jet – and three regional carriers – Turbo Megha, Air Deccan and Air Odisha Aviation — emerged as the successful bidders. Air India subsidiary Alliance Air was awarded 15 routes while Spice Jet was awarded 11 routes. Air India will start operations at 7 underserved or unserved airports while Spice Jet will make use of 6 unused airports.
But the highlight of the bidding outcome was regional carriers bagging most of the routes, with Air Odisha getting 50 routes, Air Deccan, 34 and Turbo Megha, 18 routes. “This scheme has been very successful. It has a very different business model wherein scheduled commercial airlines without smaller aircraft will not be able to operate,” said Jayant Sinha, Minister of State for Civil Aviation. Significantly, on as many as 6 routes, airlines bid without seeking Viability Gap Funding (VGF) from the Centre, indicating their business potential.
“The RCS scheme is expected to make air travel affordable for people in small cities and towns. At the heart of this scheme is the development of no-frill airports which will not only help the aviation sector to grow but also boost the economy. But for RCS to be successful, growth in infrastructure is imperative,” says Dhiraj Mathur, Partner, Price WaterhouseCoopers.
In the second round of bidding likely to be held in July, ministry officials expect other scheduled commercial airlines to participate though lack of smaller aircraft with most of the scheduled operators poses a hurdle. At the beginning of March, the Union government sanctioned `4,500 crore for the development of 50 unserved and underserved airports across the country. The Airports Authority of India (AAI) — the nodal agency for the implementation of UDAN — will develop 15 unserved airports or air strips each in FY18 and FY19. In FY20, the state-run airport developer would revive 20 more airports.
08/05/17 Malyaban Ghosh/Financial Express