Over the years, the Indian aviation sector has experienced a rise in passenger traffic. According to data by the Airports Authority of India, airports in the country catered to 376.4 million passengers in 2023-24, a 15 per cent rise from 327.3 million passengers in 2022-23. When comparing this figure to that of 10 years ago (2013-14), there has been a drastic rise of over 120 per cent. Factors such as the development of new airports, expansion of existing ones and creation of new routes have facilitated this increase in passenger traffic. Further, supportive policies like the Regional Connectivity Scheme-Ude Desh ka Aam Nagrik (RCS-UDAN) have also been driving this trend. This has positively impacted the sector, facilitating better connectivity within the country and an increase in passenger traffic at regional and smaller airports.
RCS-UDAN: Features and update
The RCS-UDAN is a component of the National Civil Aviation Policy, 2016, which aims to provide infrastructure and connectivity to unserved and underserved regions in India. Since its inception, the UDAN scheme has witnessed the launch of various versions, with the most recent ones being UDAN 5.1, 5.2 and 5.3. Among these, UDAN 5.2 focuses on last-mile connectivity, remote and regional area connectivity and tourism through small aircraft (less than 20 seats).
The scheme commenced in October 2016 and the first flight was flagged off in April 2017. It offers financial incentives for airline operators, encouraging them to carry out operations on RCS-UDAN routes and ensuring that airfares are affordable to the masses. For viability gap funding, 20 per cent of the share is by the state government, while the share in the north-eastern states and union territories is 10 per cent. Scheme allocations are carried out to ensure balanced regional growth, with a cap of 30 per cent for a given region. As per targets, 1,000 UDAN routes are aimed to be operationalised and 100 unserved and underserved airports are aimed to be revived or developed by the end of 2024. As of April 18, 2024, 85 airports have been operationalised under the scheme, comprising 65 unserved and 20 underserved airports, including heliports and water aerodromes. In 2023-24 alone, 10 unserved airports were operationalised. Further, in the same period, 565 routes have commenced under the scheme since its inception. It has also led to the creation of new airlines to cater to these routes, and providing a boost to existing airlines such as FlyBig, Star Air and IndiaOne Air.
However, the RCS-UDAN routes encounter several obstacles. Firstly, not all the operationalised routes are currently functional, and some have been halted or discontinued. This is due to reasons such as low occupancy rates and lack of infrastructure. Of the 517 routes operationalised as of November 30, 2023, only around 56 per cent continued operations. These include routes that remained in operation after the three-year tenure had expired. As per the scheme, the successful airline operator that bids for a route will have an exclusive right to operate on the route for three years, after which support is withdrawn, with the expectation that the route would become self-sufficient. Of the 76 airports operationalised as of November 2023, 12 were non-operational. These were then included in the list of airports that were available for bidding. The reasons for these airports being non-operational include the absence of airlines and operators that were yet to commence operations. Regardless, the RCS-UDAN has played a key role in shaping passenger traffic trends for regional and smaller airports.
Changing trends
The total passenger traffic at Indian airports has witnessed an increasing trend over the years. This has been supported by various infrastructural, policy and technological developments in the sector. Moreover, despite being massively impacted by the Covid pandemic, the sector witnessed a notable improvement. According to statistics, the total passenger traffic crossed the pre-pandemic levels in 2023-24, with international passenger traffic witnessing faster growth than domestic traffic.
The Indian population is not concentrated in its major metro cities but is dispersed across its vast territory. Therefore, connecting remote communities to business, trade and tourism hubs presents a considerable challenge for the industry. This trend is also evident in the distribution of air passenger traffic, which is largely concentrated in a few major metro cities.
In 2023-24, the top six metro cities, namely, Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata and Chennai, accounted for around 61.12 per cent (230.06 million passengers) of the total passenger traffic, with Delhi recording the highest traffic among them (73.67 million passengers) during the period. Meanwhile, other airports, apart from the top six metro airports, witnessed a share of 38.88 per cent (146.37 million passengers). When comparing the share of the top six metro airports to other airports in 2013-14, they accounted for 67.26 per cent (113.62 million passengers) of the total passenger traffic, while the other airports had a much lower share of 32.74 per cent (55.3 million passengers).
The RCS-UDAN scheme has played a key role in directing the shift towards the other airports, especially the smaller regional ones. As of April 2024, the scheme has benefitted around 13.7 million passengers. Air travel connects areas characterised by difficult terrain, such as hills and islands. Further, it reduces travel time and provides enhanced comfort compared to surface transport. With the promotion of last-mile connectivity, there has been a rise in air traffic demand on these RCS-UDAN routes, facilitating connectivity to Tier II and Tier III cities. These airports (excluding the top six metro airports) accounted for a share of 38.88 per cent in 2023-24 in comparison to 2016-17 (33.95 per cent). The increase in the share of the other airports over the years indicates a positive trend, moving away from the concentration of passenger traffic on only a few routes and airports.
The increase in passenger traffic at other airports can also be attributed to factors such as the rise in consumers’ income levels, changes in spending patterns and new routes by airlines. Moreover, it is observed that air passengers are using flights not only for business meetings and work-related travel, but also for education, medical needs and leisure, which is leading to an increased demand in Tier II and Tier III cities.
Conclusion
Passenger traffic at airports is expected to witness an increase in the coming years. Schemes such as the RCS-UDAN, aimed at enhancing regional and last-mile connectivity, as well as moves by airlines to increase operations to smaller airports, are expected to be positive growth drivers. This new area of demand in Tier II and Tier III cities will be central to the passenger growth story. For instance, the opening up of new smaller airports in Uttar Pradesh in the districts of Aligarh, Adamgarh, Azamgarh, Chitrakoot, Moradabad and Shravasti will contribute to easier air travel and accessibility for citizens.
Furthermore, top metro airports are witnessing an increase in passenger handling capacity through airport expansion projects. Upcoming greenfield airports like those at Navi Mumbai and Jewar are expected to add to the overall passenger handling capacity of the country. The concentration of passenger traffic at metro airports, to some extent, seems to be inevitable. These top airports tend to see high passenger traffic due to factors like higher population, in addition to serving as hubs for domestic connections. For instance, airports in Delhi, Chennai and Bengaluru see high domestic passenger traffic because they connect the nearby airports in the region. These airports also serve as connection facilities to international destinations. Looking ahead, though metro airports would likely continue to see a concentration of passenger traffic, other smaller airports are also expected to witness a slow but gradual increase in passenger share.
Naina Gulati and Shreya Annie Mathew
