Many small towns still wait to take off

Three and a half years after the government’s much-hyped regional air connectivity scheme (RCS) connecting tier II and tier III cities took to the skies, aviation experts are still debating whether the scheme is on track to achieve what it set out to do. In a recent webinar on ‘Reinventing regional aviation’, the aviation consulting firm CAPA India Advisory highlighted the importance of the scheme for a vast country like India.

According to Kapil Kaul, CAPA India Advisory’s Chief Executive Officer and Director, regional air connectivity is critical for India, and UDAN (or ude desh ka aam nagrik — namely, every citizen can fly, as the RCS initiative is named) marked the democratisation of air travel in India.

Airlines operating under the UDAN scheme have to ensure that at least 50 per cent of the seats are sold at ₹2,500 each for a one-hour flight. The Centre and State governments provide these airlines viability gap funding (VGF) to ensure profitability.

This connectivity is critical as India has a strong middle class of about 30 crore people, which is the focus of RCS.

Nripendra Singh, Industry Principal, Aerospace, Defence and Security Practice, Frost & Sullivan, points out that all airlines were keen to venture into untapped destinations but were avoiding them because of the initial costs of operating on these routes; instead they were content with waiting for the market to mature. “RCS helped every airline by creating a buffer to contain the cost and develop the market with VGF support, which was widely supported by every Indian carrier,” Singh says.

While all this is good news, aviation experts believe that a lot more needs to be done to make RCS more acceptable among the people.

“We need to review and then re-target capital and assets to make it more outcome-based,” Kaul says.

Jagannarayan Padmanabhan, Director and Practice Leader — Transport and Logistics, CRISIL Infrastructure Advisory, says that since RCS became operational, 688 valid routes have been awarded, of which 281 have been operationalised. “This means that more than 40 per cent routes are up and running,” he points out. The routes were awarded in five rounds to 11 operators including SpiceJet and IndiGo. The Ministry of Civil Aviation’s website adds that till December 4 this year, 53 airports, including five heliports and two water aerodromes, were operational while 5.1 million persons had flown across more than 99,000 flights on the UDAN routes. Some of the RCS routes are Delhi-Bathinda, Nanded-Hyderabad, Kadapa-Hyderabad and Delhi-Shimla.

Padmanabhan adds that some tweaks are needed to give RCS the last-mile push.

“The need of the hour is to package RCS properly and sell it to the audience. It will be good to bring out the distinction that road is good for freight and for shorter distances, and RCS for safety, family travel and squeezing in more in less time,” he adds.

Padmanabhan points out that there is a need to market RCS on a continuous basis, create a brand, invite people to explore, host events in tier-II locations, and follow it up with reliable and efficient service. He emphasises that it is important to deglamorise air travel and make it more value-for-money travel.

“The government needs to continue to make adjustments to the scheme as per the shifting market dynamics for at least the next three to five years,” Singh adds.

However, bottlenecks remain, including inadequate infrastructure and delayed approvals for new airlines, says Padmanabhan.

Others also suggest a single-window clearance for all projects and approvals for RCS. “However, this single-window clearance may work only with support from various stakeholders including the ministry, the Directorate of Civil Aviation (DGCA) and State governments,” Padmanabhan adds.

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