India’s new regional connectivity scheme will look at “last mile connectivity” in Tier-II and Tier-III towns through smaller aircraft, that include sub-20 seaters, the Union Civil Aviation Minister, Jyotiraditya Scindia said.

Sub-20 seater aircraft, which include Cessna Caravans, beach-crafts, helicpoters and so on, are being looked at. Scheme proposals are also being formulated exclusively around sea-planes.

According to Scindia, UDAN 4.2 is based on all the routes that “either were not executed in the earlier rounds” or on the small aircraft scheme routes.

Approximately 370 routes are being put in under UDAN 4.2, of which 100 are seaplane routes, 60-odd are helicopter routes, and the balance are fixed wing routes.

“You need to be able to look at the metros as your base, and from the base you need to look at international traffic coming in. And from the metros, you need to look downwards for Tier-II and Tier-III connectivities. We always look upwards, that is international traffic. But the real potential, I believe, lies in Tier-II and Tier-III connectivity. So I am coming up with a small aircraft scheme,” Scindia told BusinessLine.

“Those (UDAN 4.2 routes) should open up around May 30 and the results will be available in the next few weeks or so,” he added.

Small aircraft scheme

Scindia explained that there are three options that have been included in the small aircraft scheme to make offerings financially viable for operators.

Proposals include one where there will be a fixed fare that is charged for the full plane (based on which operators apply for viability gap funding).

The second one is a variable option where the airline operators bid for the route in the form of VGF per seat, with the VGF being capped for a particular number of seats and the other seats are priced according to market dynamics.

The third formula is primarily for seaplanes, where the leasing cost of the plane will also be taken into account at the time of bidding.

Typically, the award of regional connectivity routes is done through a market-determined, competitive bidding mechanism where the airline operators bid for the route in the form of VGF per seat. The VGF is a form of monetary assistance that is provided by MoCA to the airline operator to enable them to successfully run the routes.

“Seaplanes, never took off in India because the capital cost or leasing cost of an aircraft cannot be defrayed across the number of seats. Then it becomes too uneconomical, “he said.

Around ₹98,000 crore of Capex has been earmarked across airports in the country over the next three-to-four years. These include 42 brownfield expansion projects and three greenfield projects taken up by the Airports Authority of India (AAI) at an estimated cost of ₹32,000 crore. Around ₹66,000 crore will be invested by private players across seven brownfield and four greenfield airports.

Demand Recovery

Indian aviation is already witnessing a strong recovery post-Covid . The sector has already reached and surpassed the pre-Covid levels, Scindia said.

“We have reached and surpassed the pre-Covid levels. But we have to maintain the number of passengers travelling per day over a period of time. And that’s what I’m watching every day. I am content. But, I would like to see the stabilisation of these numbers,” he added.