Tuesday, October 26, 2021

UDAN scheme: Aviation Ministry likely to seek four-fold increase in FY23 budgetary outlay

With domestic air traffic picking up and the Indian aviation industry showing signs of a recovery from the impact of the Covid pandemic, the Ministry of Civil Aviation and the Airports Authority of India expect 2022-23 to be a big year for the industry.

A preliminary estimate by the Airports Authority of India and the Ministry of Civil Aviation suggests that they will need a budgetary allocation of Rs 2,500 crore under the UDAN regional connectivity scheme in 2022-23, a government official told Moneycontrol.

In the Budget for 2021-22, the government had allocated Rs 600 crore for the UDAN scheme, which was 14.28 percent lower than the money allocated in 2020-21.

If the Finance Ministry accepts the proposal by the Civil Aviation Ministry, this will be the largest budgetary allocation towards the UDAN scheme.

“The government is pushing to complete its target of achieving connectivity to 100 airports under the UDAN (Ude Desh Ka Aam Naagrik) scheme, and hence more funds will be required to operate flights,” a senior AAI official said.

The AAI has now bid out routes under the fourth phase of the UDAN scheme, which is expected to increase the scheme’s subsidy burden, especially in 2022-23, when air traffic returns to pre-Covid levels on these routes, the official said.

The ministry and AAI expect regional routes to bounce back in 2022-23 after struggling since the outbreak of the pandemic, with the government prioritising development of the regional connectivity scheme, multiple officials said.

The aviation ministry has awarded more than 800 domestic routes to various operators over four rounds since March 2017, providing connectivity to about 60 airports across the country under the UDAN scheme.

However, only 419 of the routes awarded are operational as of today, with large private airlines shying away from using most due to inadequate infrastructure and low demand.

In a report, rating agency ICRA said that only 47 percent of the total number of routes and 39 percent of the airports (unserved and underserved) had been operationalised under UDAN as of May 31.

26/10/21 Yaruqhullah Khan/Moneycontrol

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