Regional Air Connectivity Scheme

Brij Bhardwaj

"Hawai chappal wale ko bhi hawai jahaz mein hume bithana hai (We want to ensure that even those who wear slippers get to travel by air). We want the regional aviation market to flourish in the country," Minister of State Civil Aviation Jayant Sinha said, adding that 16 airports are ready to fly under the regional connectivity scheme from January next year.

The Centre unveiled a regional connectivity scheme, known as UDAN (Ude Desh ka Aam Naagrik), with flights priced at Rs.2,500 for one hour of flying time to and from regional airports, but raised the subsidy amount to be paid to regional airlines from the level proposed in the draft scheme.

The objectives of the scheme are affordability growth and connectivity. The scheme would not only make air travel affordable for the commonman but would also have far reaching effect on growth of tourism, balanced regional growth and increase in employment opportunities in the hinterland. This scheme aims at reviving more than 50 unserved and underserved airports in small and medium cities.

Under the scheme, airlines will be offered a slew of sops at smaller airports such as waiver of landing and parking charges. "Extending the airports benefits for flights operating from small to major airports under the scheme is under active consideration of the government. We are inclined to do that but it has to undergo a legal process," According to Civil Aviation Secretary R. N. Choubey. In a bid to woo the regional carriers, the subsidy amount has been increased from the draft scheme released earlier this year. Airlines will now get subsidy in the range of Rs.2,350-Rs.5,100 per seat for three years.

About 22 airports will get connected under regional connectivity scheme in the first phase.  In the first phase, there are 22 airports that are already in place and flights can start as and when airlines plan to. These include one in Andaman Nicobar, three in Assam, two each in Gujarat, Uttar Pradesh, Punjab and Rajasthan. AAI would invest Rs 17,500 crore in upgrading airport infrastructure over a period till 2019-20. The amount will be generated through internal accruals. Money can also be raised from outside. The money to be spent will be on upgrade in building airport terminals and expanding runways at many existing airports. The money would also be invested in upgrading 30 smaller airports for regional flights. AAI also plans to build 50 no-frills airports across the country.

Regional airlines can ask for subsidies for flying a distance of at least 150 km by submitting a proposal to operate on a particular route to the government. After scrutiny of the initial proposal, government will invite counter proposals within a window of two weeks.

Airlines quoting the lowest viability gap funding amount will win the bid, through a reverse bidding mechanism. The successful bidder would then have exclusive rights to operate the route for a period of three years. The airline will have to provide a minimum of nine and maximum of 40 seats at the fare of Rs.2,500 for an hour's flight. The bidding process will begin in January next year following which routes will be awarded immediately,  said. The bidding process will take place twice in a year.

Even as the government said the first flight from smaller cities under the scheme should take off by January next year, There has been no announcement yet on the amount of levy to be imposed on flyers on regular routes to fund the subsidy. The government will provide subsidies to regional airlines to offer half the seats on a discounted rate.

On the day of its launch some airlines expressed concerns on the modalities of the  regional connectivity scheme, and opined that concessions need to be extended to large airports to which flights will be connected from regional airports. It is unclear if the concessions will be provided at both small and large airports. A clarification on whether concessions on small airports will be given on the larger airports was sought as it will impact the economic viability of the entire project. Slot availability at large airports will be another issue.

The central government would extend its support by viability gap funding to airlines, concessional exeise duty on Aviation turbnie fuel/ and rebatein service tax on air tickets. The State governments also propose to offer concessional VAT on Aviation Turbine fuel, free land, security and fire services as well as utility services at concessional rates. The airport operatons propose not to charge for landing, parking and navigation to air crafts at airports coming under this secheme.

The UDAN scheme is likely to be a game changer for the aviation sector with far reaching impact on the other related sectors. The revival of unserved and under served airports would give the much needed boost to the infrastructure already in place. A developing country like India can ill afford to let its infrastructure and precious resources spent on it, remain unused or under used. This scheme will not only let the common man fly at affordable prices, it would boost the economy and would lead to job creation.

(The author is a senior journalist. Views are personal.)