Over the years, there has been significant development in the aviation sector, led by growing traffic numbers and flight operations. However, it has been observed that most of the development has been concentrated in a few regions of the country. Over 70 per cent of passenger traffic comes from 10-12 metropolitan cities. At a recent conference organised by Indian Infrastructure, Usha Padhee, joint secretary, Ministry of Civil Aviation (MoCA), discussed the initiatives taken by the government to enhance regional connectivity, and highlighted some of the key challenges along the way. Excerpts…
The MoCA has launched the Regional Connectivity Scheme (RCS), also known as the Ude Desh Ka Aam Nagrik (UDAN) scheme, to ensure that the fruits of development reach all parts of the country. The scheme aims to make air travel affordable to all. Till February 2021, 54 airports have been opened up, and 317 routes have been operationalised under the RCS. Besides, about 5.5 million passengers have benefited from the scheme. With enhanced connectivity, there has been an increase in the share of passengers travelling to the regional airports. In order to make India a $5 trillion economy, the penetration of air transportation, which currently stands at 6-7 per cent, needs to be increased. Connectivity and affordability need to be achieved to bring about a trigger effect in the aviation market, which is currently dominated by a few key airlines.
The government has adopted a two-step strategy to enhance regional connectivity. First, the government is focusing on infrastructure development. Between 2019 and 2024, a total of 100 airports are planned to be developed under the RCS, including water aerodromes and heliports. While expansion plans are already being executed on some of the airports, AAI is set to develop about 50 more airports in the next two to three years. The ongoing Covid-19 pandemic has slowed down the development process though it is picking up now.
In 2020-21, about 14 airports are planned to be opened up. Once the required infrastructure has been created, the government will focus on providing certain non-financial incentives to airlines in order to trigger operations at airports. In case such incentives are unable to cover the operational costs of airlines, the government has proposed to supplement these with a viability gap funding (VGF). The financial incentives in the form of VGF are provided through a transparent bidding process on an e-platform, where airlines bid for the per seat cost.
Challenges and the way forward
The RCS has been facing various challenges, and the government is continuously working on overcoming them. As a developer and operator of airports, AAI has limited financial strength to support fast-paced infrastructure development. Having said that, the airport privatisation programme is expected to not only enhance efficiency in airport operation, but also enhance AAI’s capacity to develop new airports in remote regions of the country. The government is also awarding routes to airlines well in advance, so that airports can be developed after a complete assessment of demand for different routes.
Another challenge is that the airlines in the country are mostly scheduled commercial operators that lack the necessary models and planning to serve regional airports. However, major airlines like Indigo are now showing interest in operating on regional routes under the UDAN scheme. So far as the non-scheduled airline operators, helicopters and seaplanes are concerned, the government is now providing them the flexibility to operate in the non-scheduled environment under the RCS, in order to help them avoid high operational costs. Besides, the state governments are being encouraged to bring down the fixed costs associated with airline operations on the desired routes. Meanwhile, strict air travel restrictions in metropolitan cities amid the Covid-19 pandemic are encouraging airlines to explore the untapped opportunities offered by the new regional routes.
Going forward, the MoCA aims to operationalise 100 airports and 1,000 routes under the UDAN scheme by 2024. Besides, the development of new transportation modes, such as water aerodromes and helicopters, for enhanced connectivity to remote locations, hilly regions and the north-eastern region will be the major focus area of the government. The creation of a sustainable ecosystem for regional operations, with active support from different stakeholders, is the need of the hour.