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All you wanted to know about UDAN

ANAND KALYANARAMAN | Updated on March 09, 2018

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The UDAN scheme, in the works for nearly a year, got flying late last month with the Shimla-Delhi, Kadapa-Hyderabad and Nanded-Hyderabad air routes flagged off by the Prime Minister. Last week, IndiGo Airlines, the country’s largest air carrier, announced its plan to participate in the scheme.

What is it?

Among the many alphabet soups coined by this government, UDAN stands out for clever word-play. Udaan means flight in Hindi and UDAN expanded is Ude Desh Ka Aam Naagrik — that is, let the common citizen of the country fly. The civil aviation minister summed up the scheme’s vision last year as “getting every hawai chappal wearing Indian to board a hawai jahaz (aeroplane)”.

UDAN is a regional connectivity scheme that seeks to boost air connections in India. This it seeks to do by linking up hundreds of unserved and underserved airports in Tier 2 and Tier 3 cities with major cities and with each other. The modus operandi — subsidise air tickets making it affordable for passengers in small centres to fly, and offer viability gap funding (subsidies) and various incentives making it feasible for airlines to offer subsidised tickets. So, for instance, half the tickets on one-hour flights under UDAN will have a fare cap of Rs 2,500 and the remaining can be sold at market rates. The Central and State governments will subsidise airlines flying the UDAN routes, with the former providing the chunk; a cess on flights on major routes will fund a part of the subsidy. Besides, there will be concessions on fuel taxes, airport charges, etc. Airlines will also get three-year exclusivity on routes allocated in auctions. The airfares and the viability gap funding under UDAN will be revised on a quarterly basis, based on inflation and other factors.

The first round of auctions held earlier this year saw 128 routes being awarded to five operators — Alliance Air, Air Deccan, Air Odisha, Trujet and SpiceJet. The next round of auctions is expected within three months. With big players such as Alliance Air, SpiceJet and IndiGo throwing their hats into the ring, UDAN seems to be on a promising flightpath. It remains to be seen though whether traffic growth on the regional routes meets the scheme’s expectations.

Why is it important?

Air connectivity has a multiplier effect on tourism, investments, economic growth, job creation…the works. Getting the nooks and corners of India linked up, directly or indirectly, through the fastest mode of transportation can open up the country like never before. Cheap fares on regional routes can mean a horde of first-time fliers taking to the skies, making accessible to them new economic opportunities and quick connections in times of emergencies. India is already among the fastest growing aviation markets in the world. But infrastructure constraints at airports in big cities could slow down this growth. UDAN, if successful, can provide a fillip to India’s aviation story. It could boost passenger numbers and provide feeder traffic to networks in big centres.

Why should I care?

Travel broadens the mind, and UDAN can open a whole new world quite cheaply. By improving mobility, it can give you new vistas for employment and business. Those who hail from the hinterland can now hope to reach home much faster. On the flipside, with the Centre deciding to charge Peter to fly Paul, you will have to pay a bit more on travel between the major cities.

Bottomline

UDAN is taking wing; it’s no more a flight of fancy.

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Published on May 15, 2017

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