Flights of Fancy

Despite challenges, the third round of UDAN announces connectivity for 235 routes and 69.30 lakh new seats to be added

Yunus Dar

The civil aviation ministry recently announced the results of its much awaited third round of bidding for its flagship regional air connectivity scheme UDAN (Ude Desh ka Aam Nagrik), on 25 January 2019. The bidding, which the government claimed was the largest so far, is including new tourist routes, seaplanes for connecting water aerodromes, besides bringing in several routes in the North-East region under the ambit of UDAN.

Minister for Civil Aviation, Suresh Prabhakar Prabhu announcing results at the UDAAN-3 bidding event

According to a government press release, the response to the UDAN 3 bidding was ‘enthusiastic,’ and Airports Authority of India (AAI), the implementing agency of UDAN, received 111 initial proposals and 17 counter proposals from 15 bidders covering more than 350 routes. Besides, the proposals connecting 13 water aerodromes and more than 40 tourism routes were also received as part of the bidding process. The civil aviation ministry also announced that SpiceJet would operate international flights under the scheme from Guwahati to Dhaka and Bangkok.

Civil aviation minister Suresh Prabhu, announcing the awards under UDAN 3, said as many as 69.30 lakh seats would be added on an annual basis across the 235 routes, out of which, more than 1 lakh seats would be through seaplanes. This is in addition to the number of seats created under UDAN 1 (13 lakh) and UDAN 2 (29 lakh). The Viability Gap Funding (VGF) requirements, which are shared by the ministry and the states concerned, for 69.30 lakh seats under the latest round are estimated to be around Rs 1,167 crore.

The ministry of civil aviation has approved a total of 73 proposals of the 11 operators. Under the third round of UDAN, 89 airports, including 16 unserved and 17 underserved airports, 6 water aerodromes and 50 served airports would be connected based on the proposals identified for award. Currently, the flights are operating in around 155 UDAN routes.

Six water aerodromes to be connected with UDAN flights are the Guwahati River Front and Umrangso Reservoir (Assam), Nagarjuna Sagar (Telangana), Sabarmati River Front, Shatrunjay Dam, and Statue of Unity (Gujarat). The seaplanes would operate on 18 routes. The tourists can now directly land at these destinations with SpiceJet and Turbo Aviation winning licences to operate on water bodies under the latest round of UDAN.

The fare of the scheme, which aims to connect unserved and under-served airports, is capped by the government on a fixed number of seats.

The government claimed to have received 111 proposals from 15 airlines including existing bidders such as Air India-subsidiary Alliance Air, IndiGo, SpiceJet, Jet Airways, Turbo Megha Airways. Other operators that have been awarded routes are Andaman Airways Pvt Ltd, Aviation Connectivity and Infrastructure Developers Pvt Ltd, Ghodawat Enterprises Pvt Ltd, Heritage Aviation, Turbo Megha Airways Pvt Ltd and Zexus Air Services Pvt Ltd.

The UDAN, announced in October 2016, is one of the flagship schemes of the Modi government that offers subsidised flights at Rs 2,500 per hour of flight. The total subsidy outlay under the first phase of the scheme was Rs 214 crore per annum, which increased to Rs 500 crore annually under the second phase.

The subsidy outlay for the third phase of UDAN is estimated to go up to Rs 1,250 crore. The UDAN scheme is funded by charging the respective airlines and contributions from states that provided 20 per cent of the total subsidy cost (except northeastern states).

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