News Brief
Eight Years Later, UDAN Struggles To Fly High: Here Are The Key Issues Hindering Regional Air Connectivity
UDAN scheme. (Representative Image) (Ramesh Pathania/Mint via Getty Images)
Launched in October 2016, the UDAN (Ude Desh ka Aam Naagrik) scheme aimed to boost regional air connectivity and make air travel affordable by connecting unserved and underserved airports.
However, over eight years later, the scheme has yet to realise its full potential, according to analysts from ICRA.
While talking to journalists, Kinjal Shah, Senior Vice President and Co-Group Head, ICRA, in a webinar on the aviation sector said, “We have done some analysis on the UDAN scheme a couple of months back and in fact to our surprise as well, the UDAN scheme is yet to realise its full potential.” reported Economic Times.
Shah noted that the scheme faces increasing competition from other transportation modes, especially semi-high-speed Vande Bharat Express trains, which offer cheaper fares for short distances.
“..the competition from the other modes of connectivity like rail, etc, the Vande Bharat Express trains coming in and all those also pose a significant competition to the UDAN routes, where the fares would be cheaper than the airfares. So overall, if you look at the penetration of the UDAN routes vis-a-vis the overall air travel penetration, that penetration has remained very low at around 1 to 4 per cent,” she said.
The scheme’s viability gap funding (VGF), which subsidises airlines to operate on less lucrative routes, is limited to three years.
Shah explained, “So after three years, while you will continue to operate on that route, you would typically not have that viability gap funding, and the airfare caps which were there, those are also not applicable on those routes once they move out of the UDAN route.”
Additionally, the scheme has suffered from lower passenger load factors (PLFs) and limited commercial success for awarded routes.
“The second factor is that because of the lower PLFs on these routes, many of the airlines who were even awarded these routes chose not to actually start operating them. Out of the total routes that were awarded, I think almost only about 50 per cent of the routes actually got commercialised,” Shah added.
Despite support from the central and state governments and the Airports Authority of India, including tax concessions and reduced airport charges, the scheme has struggled to gain widespread traction.
Shah emphasised the need for greater public awareness about the scheme’s benefits, stating it could help improve its adoption and effectiveness.
