Why in news?
Five airlines will operate on 128 routes connecting over 30 unserved airports under the regional connectivity scheme.
What are the facts?
- The routes will connect 70 airports, including 31 unserved and 12 under-served ones under UDAN (Ude Desh ka Aam Naagrik) scheme.
- On each flight, 50% of the seats are capped at Rs 2,500 per seat for one-hour travel.
- The carriers will operate 19-78 seater aircraft.
- These flights would connect airports spread across over 20 states and union territories.
- The first flight under UDAN is expected to start next month.
What is UDAN scheme?
- UDAN is an innovative scheme to develop the regional aviation market. It is a market-based mechanism in which airlines bid for seat subsidies.
- This first-of-its-kind scheme globally will create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man.
- It envisages providing connectivity to un-served and under-served airports of the country through revival of existing air-strips and airports.
- The scheme would be in operation for a period of 10 years.
- The operators could seek a Viability Gap Funding (VGF) apart from getting various concessions.
- The scheme also provides for various benefits including no airport charges and three-year exclusivity on the routes.
- The States have a key role under the scheme. The selection of airports where UDAN would start would be done in consultation with State Government and after confirmation of their concessions.
- The UDAN is likely to a give a major fillip to tourism and employment generation in the hinterland.
- Through introduction of helicopters and small aircraft, it is also likely to significantly reduce travel timings in remote, hilly regions and islands.
What about Viability Gap Funding?
- For the successful completion of such projects, the government has designed VGF. It is a grant given to support projects that are economically justified but not financially viable.
- For UDAN, the money for VGF is partly raised through a levy of up to Rs 8,500 on flights operating in major routes like Delhi and Mumbai. (Rs.50 per passenger).
- The VGF amount is estimated to be around Rs 205 crore per annum for the operators chosen in the first round of bidding.
- The viability gap funding would be in place for three years for the airlines concerned from the date of starting operations in a particular UDAN route.
Source: The Indian Express
