Connectivity for 100 airports under UDAN likely to be delayed by two years to 2026: ICRA

Our Bureau Hyderabad | Updated on July 20, 2021

Estimates Indian airlines to report a significant net loss of ₹210 billion in FY2021 and estimated net loss of ₹127 billion in FY2022

The target of achieving connectivity for 100 airports under the UDAN scheme is likely to be delayed by about two years and will be completed by 2026, according to ICRA.

The Ministry of Civil Aviation had launched the UDAN (Ude Desh Ka Aam Naagrik) scheme in 2016 as a Regional Connectivity Scheme. However, as on May 31, 2021, only 47 per cent of total routes and 39 per cent of unserved and underserved airports have been operationalised under UDAN.

The number of new RCS routes which started operations increased at a healthy pace and stood at 102 and 120 routes in FY2019 and FY2020 respectively, but have declined to 77 new routes in FY2021 due to the Covid-19 pandemic. During FY2018 – FY2021, a total of ₹3,350 crore have been incurred by the Central Government towards the UDAN scheme and the budgeted outlay for FY2022 is ₹1,130 crore.

Shubham Jain, SVP & Group Head, Corporate Ratings, ICRA, says, “The slow progress of UDAN implementation is attributable to delayed upgradation of infrastructure and readiness of airports, due to lack of adequate right of way at some of the RCS airports and delays in securing necessary regulatory approvals.”

The Civil Aviation Ministry has set a target of operationalising as many as 100 unserved and underserved airports and starting at least 1,000 RCS routes by 2024. To improvise the RCS network and achieve its target of developing 100 RCS airports by 2024, the AAI has launched UDAN 4.1 in March 2021 to award 392 routes.

“The award and implementation of UDAN 4.1 may get delayed significantly due to the second wave of the pandemic in India and its effect on the Indian aviation industry. ICRA expects the target of operationalising 100 airports under UDAN by 2026, with a delay of two years from revised schedule (of 2024 from earlier 2019),” Jain said.

There has been a significant impact on financial health of airline operators due to Covid-19 pandemic. ICRA estimates Indian airlines to report a significant net loss of ₹210 billion in FY2021 and estimated net loss of ₹127 billion in FY2022, with the industry debt level increasing to around ₹500 billion in FY2022.

Published on July 20, 2021

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