Thursday, October 21, 2021

Why Alliance Air is key to the success of the government’s UDAN scheme

As the Indian aviation industry recovers from the aftermath of the Covid-19 pandemic, the Central government, having sold Air India, is now looking to focus on strengthening its regional connectivity scheme UDAN (Ude Desh ka Aam Naagrik).

On October 20, the Prime Minister inaugurated Kushinagar International Airport and Civil Aviation Minister Jyotiraditya Scindia last month announced that 50 new routes would be launched under UDAN by November 30, taking the total tally of routes launched under the scheme to 419 in the last four years.

While the government has awarded close to 800 routes under UDAN in the last four years, large private airlines have shied away from using most of the routes, due to inadequate infrastructure and low demand.

Rating agency ICRA, in a report, said that only 47 percent of total routes and 39 percent of airports (unserved and underserved) have been operationalised under UDAN as of May 31.

“The slow progress of UDAN implementation is attributable to delayed upgradation of infrastructure and readiness of airports, due to lack of adequate right of way (including insufficient runway lengths) at some of the RCS airports and delays in securing necessary regulatory approvals,” Rajeshwar Burla, Vice President and Group Head, Corporate Ratings, ICRA, told Moneycontrol.

He added that low demand on a few routes, and adverse/unpredictable weather conditions lead to inconsistent operations and have also resulted in closure of operations by some airlines in a few cases.

However, despite the slow progress of the UDAN scheme with private airlines, state-owned Alliance Air, a former subsidiary of Air India, has emerged as the biggest success story of the UDAN scheme. In 2019-20, it managed to break even for the first time despite largely operating routes under UDAN.

According to Air India’s website, Alliance Air has a fleet of 18 ATR 72-600 aircraft and operates 64 flights daily. In September, Alliance Air carried around 90,000 passengers on 2,200 flights, with a majority of them being operated under UDAN.

While Alliance Air’s numbers would translate to it holding a market share of just 1.15 percent in the Indian aviation space, this is still much higher than the market share of regional players Trujet and Star Air, which carried around 15,000 and 18,000 passengers, respectively, in September, and had market shares of 0.2 percent and 0.3 percent, respectively, according to data from the Directorate General of Civil Aviation.

Furthermore, Alliance Air is going head-to-head with the likes of industry giants IndiGo and SpiceJet on the routes the government is aiming to operationalise under UDAN. Alliance Air operates 79 routes under UDAN, while SpiceJet and IndiGo both operate 84 routes each, data from the Airports Authority of India (AAI) show.

Of the 800 routes that have been awarded under UDAN, Alliance Air has bid for nearly 200 routes, more than any other airline.

“Alliance Air is an important link since most of the routes under UDAN are bid for and operated by Alliance Air. The airline also took over a few routes that the likes of Air Deccan had vacated or could not start, which further highlights its importance to the UDAN scheme,” Ameya Joshi, a senior aviation expert, told Moneycontrol.

The importance of Alliance Air can also be seen by looking at the data for airports operationalised under the UDAN scheme over the last four years.

Around 60 airports have been operationalised (including 5 heliports and 2 water aerodromes) under the UDAN scheme until now, with 25-30 coming up in tier 2 cities, 27-30 coming up in tier 3 cities, and 5-10 coming up in smaller towns, according to ICRA.

21/10/21 Yaruqhullah Khan/Moneycontrol

To Read the News in full at Source, Click the Headline


Post a Comment