The Ministry of Civil Aviation (MoCA) released the National Civil Aviation Policy in 2016. One of the fundamental areas of this policy is the Regional Connectivity Scheme-UdeDesh ka AamNaagrik (RCS-UDAN), launched on October 21, 2016. The primary objective of RCS-UDAN is to enhance regional connectivity from unserved and underserved airports in the country (especially in Tier II and Tier III cities) through fiscal support and infrastructure development, thereby making air travel affordable to the masses.
Story so far
As of June 5, 2022, under RCS-UDAN, the Airports Authority of India (AAI) has awarded 948 valid routes across the length and breadth of the country to selected airline operators (SAOs), covering 154 RCS airports (including 14 water aerodromes and 36 helipads). Of this, more than 420 routes under RCS-UDAN have been operationalised. Further, 67 RCS airports, including eight heliports and two water aerodromes, have been operationalised as of April 18, 2022. Under the Union Budget 2022-23, Rs 6.01 billion was allocated to the RCS-UDAN scheme. This was a decline of 40 per cent as compared to the revised allocation of Rs 9.94 billion for 2021-22.
There has been a delay in the operationalisation of some routes (along with discontinuation of some others) due to the outbreak of the pandemic and unsustainability of operation on the awarded routes. Besides, SAOs and civil airports/ helipads are not prepared to address land availability issues, create regional infrastructure, obtain licence from the regulator, etc.
So far, UDAN has had a positive impact on the country’s economy and has witnessed a positive response from industry stakeholders, especially airline operators and the state governments. More than 350 new city pairs are now scheduled to be connected under the scheme. Of these, 200 have already been connected, providing connectivity across the country, ensuring balanced regional growth, and driving economic growth and employment for the local population.
The scheme also led to the development of new greenfield airports such as Pakyong near Gangtok in Sikkim, Tezu in Arunachal Pradesh and Kurnool in Andhra Pradesh. It also led to 5 per cent incremental growth in the domestic passenger share of non-metro airports.
Incentivisation under UDAN
Many financial incentives in terms of concessions from the central and state governments and airport operators are extended to SAOs to keep the airfare affordable and encourage operations from unserved/underserved airports, heliports and water aerodromes. The state/union territory governments have to provide the land for the revival/upgradation of awarded airports wherever required as per the provisions of the scheme documents.
The total receipt/collection in the Regional Air Connectivity Fund Trust stands at Rs 24.59 billion. Meanwhile, as of March 21, 2022, the total viability gap funding disbursed to the SAOs under RCS-UDAN stands at Rs 17.85 billon. Of this, Rs 1.46 billion was disbursed in 2018-29, Rs 6.81 billion in 2019-20 and Rs 3.4 billion in 2020-21.
New bidding round
RCS-UDAN is an ongoing scheme, under which bidding rounds are conducted periodically for covering more routes and destinations. Recently, bids under UDAN 4.2, incorporating the provisions of the new small aircraft sub-scheme, were invited in April 2022. The last date for the submission of bids was May 10, 2022.
The aim of UDAN 4.2 is to enable last-mile connectivity by establishing a system for smaller planes and helicopters with a capacity of 19-20 seats. Reportedly, UDAN 4.2 is either based on the routes that were not executed in the earlier rounds or on the small aircraft scheme routes. Approximately 370 routes have been included under UDAN 4.2, of which 100 are seaplane routes, 60 are helicopter routes and the remaining are fixed wing routes.
The road ahead
Under the RCS-UDAN scheme, there has been a growing focus on providing air connectivity to Tier II and Tier III cities. MoCA plans and commits to construct 100 new airports by 2024 in India with 1,000 new routes by 2026 under RCS-UDAN. Against the year-wise target to operationalise airports/heliports/water aerodromes, 20 airports are expected to be operationalised in 2022-23 and 25 in 2023-24. The set targets can be achieved by focusing on operationalising routes in priority areas as, till now, airlines have been inclined towards profitable routes only. The launch of UDAN 4.2 is expected to give an impetus to last-mile connectivity through airways. W