Thursday, March 07, 2019

UDAN Fails To Take Off

With enhancing regional connectivity underlined as a ­major goal of the National Civil Aviation Policy 2016, the Modi government brought in a scheme to utilise unserved and underserved airports to provide air connectivity to Tier-II and Tier-III cities at an affordable cost. Under the UDAN (Ude Desh ka Aam Nagrik) or Regional Connectivity Scheme (RCS), existing and new airline operators were asked to bid for air routes from the list of unserved and underserved airports, and offered subsidy in the form of viability gap funding (VGF) on a maximum of 25 seats (provided that’s at least half of the total capacity). PM Narendra Modi flagged off the first UDAN flight in April 2016, from Shimla.
“The majority of the 400-odd unserved and underserved airports are in cities with populations over 5 lakh. Elsewhere in the world, there are viable air services between cities with populations over 2 lakh,” says a senior government official requesting anonymity. However, though four phases of UDAN—1, 2, 3 and 3.1—have been launched, it doesn’t seem to be heading in the intended direction. In the first round of bidding in March 2017, five selected airlines won 128 routes connecting 43 airports, while 325 routes were awarded to 15 airlines in the second round in January 2018.
According to an analysis by Outlook of the first two phases of RCS routes along with air operators, industry experts and AAI traffic reports, the success rate is app­arently less than 20 per cent. Of the 440-odd air routes allotted to 14 major and fledgling airlines under the two phases of UDAN, not more than 40 to 60 routes are operating regularly.
Take the case of Hisar airport in Haryana, which has everything an operational airport needs—tight security, good road connectivity, ready infrastructure and a licence from the Directorate General of Civil Aviation (DGCA)—but air services are yet to begin. In Dec­ember 2017, the Ministry of Civil Aviation (MoCA) had allotted the Delhi-Hisar and Chandi­garh-Hisar routes to priv­ate airline Pinnacle Air, which was supposed to start the services within six months of signing the MoU. No one knows why there are no flights when both the airport and the operator are ready.
Airport officials and Pinn­acle Air refused to comment officially. Off the record, it’s a blame game from both sides. Interestingly, the state government has invited bids for the very routes already allotted to Pinnacle Air with a three-year exclusivity clause.
Similar is the ground reality of dozens of other unserved and underserved airports launched under UDAN—Cooch Behar in West Bengal, Tezu in Arunachal Pradesh, Sholapur in Maharashtra and Jharsuguda in Odisha are all idle despite getting the DGCA licence. Spicejet recently ann­ounced that flights from Jharsuguda to Delhi, Hyde­rabad and Calcutta would begin on March 31.
Regarding Cooch Behar and Sholapur, the AAI maintains that all facilities are in place and the operator—Spicejet, which won the bid to operate flights from Bangalore—is not able to fly due to its own constraints. A Spicejet spokesperson, however, says the infrastructure isn’t ready yet, contradicting the AAI’s claim.
Industry experts and air operators list several operational, technical, procedural and financial problems in the ambitious Rs 4,500-crore scheme. The two biggest bidders—Air Odisha and Air Deccan—had won 84 routes in nine networks. The government had to cancel seven networks as they failed to fly on them. The two networks are with Air Deccan, one of which it got from Air Odisha, and is operating on neither—though government sources say the services would start soon. Both Air Odisha and Air Deccan didn’t respond when contacted.
Smaller operators such as Zoom Air, Trujet, Pinnacle Airlines, Heritage and AAA Aviation are the worst performers as they succumbed to the operational issues. “UDAN cannot run without small operators as only small aircraft (10 to 70 seats) can land and take off from the majority of regional airports,” says the CEO of an airline operator who doesn’t want to be identified. “UDAN enables people to fly at the cost of train tickets, but due to lack of a proper ecosystem for smaller operators, their ope­rational costs go so high that the government subsidy fails to compensate the losses.”
Moreover, as there is no lic­ensed flight training institute for pilots and engineers of smaller aircraft in India, they have to be hired from abroad. Even the spare parts are imp­orted. The smaller operators allege that the scheme has benefited only the bigger players who don’t need subsidy. “Big aircraft carry over 180 fliers in one trip. So per trip, they earn more than they can spend. They can easily aff­ord parking and handling charges at airports like Delhi,” complains a smaller operator.
06/03/19 Jeevan Prakash Sharma/Outlook