UDAN
Ude Desh ka Aam Naagrik, known by its acronym UDAN-RCS is a regional airport development programme of the Government of India and part of the Regional Connectivity Scheme of upgrading under-serviced air routes. RCS scheme consists of setting up Greenfield airports and as well as upgradation of Brownfield airports. Its objective is to make air travel more accessible and contribute to economic development in India. At the beginning of the scheme, out of a total of 486 airports, 406 were under-serviced and only 27 were well-served; out of 97 non-RCS airports only 12 were operational. The UDAN scheme was created to add to this number by expediting the development and operationalization of India's potential target of nearly 425 unserved, under-served, and mostly underdeveloped regional airports with regularly scheduled flights. However, several issues and criticisms of its poor infrastructure, dominance by larger airlines, degradation of regional airlines, and slow implementation have plagued the scheme. In October 2023, India has 149 operational airports for civil aviation, including 30 international, 12 customs, 107 domestic, and few more civil aviation enclaves within military air bases. India is also planning to build the second airports in the big cities to decongest, 6 by 2030, 15 by 2040 and 30 plus by 2047.
UDAN-RCS is integrated with other Government of India schemes, such as Bharatmala, Sagarmala, Parvatmala, Setu Bharatam, Dedicated Freight Corridors, Industrial corridor, BharatNet, Digital India and Make in India, National e-Governance Plan, Startup India and Standup India.
Phases
UDAN 1.0: 36 new airports were commissioned. 128 flight routes for 70 airports were awarded to 5 airline companies.UDAN 2.0: A helipad was added for the first time. In 2018, 73 unserved airports were announced.
UDAN 3.0: Several changes were made, including tourist routes, seaplanes to connect water aerodromes, and routes under 'UDAN' in the North-East region.
UDAN 4.0: 78 new routes were approved in 2020. In this phase, the Kavaratti, Agatti, and Minicoy islands of Lakshadweep will also be connected by new routes.
UDAN 4.1: This phase is focused on connecting small airports, special helicopter, and seaplane routes under UDAN. New ways have also been proposed under Sagarmala seaplane services.
Details
The UDAN Scheme is a key component of the Prime Minister Narendra Modi's National Civil Aviation Policy which was released by the Ministry of Civil Aviation on 15 June 2016. The scheme will be jointly funded by the central government and state governments. Several states have come on board by signing the "Memorandum of Understanding" with the union government for this scheme. UDAN RCS will connect an unspecified number of new regional routes by operationalizing 100 regional airports by the end of the 2018-2019 financial year, with a target of 13 lakhs annual passenger seats. It will require crore in viability gap funding annually. Qualifying routes must have three to from the same airport.The scheme has two components. The first component is to develop new airports and enhance the existing regional airports to increase the number of operational airports for scheduled civilian flights from 70 to at least 150 airports with regularly scheduled flights. Initially, more than 100 underserved and unserved regional airports will be developed by December 2018, for which the initial funding of for the enhancement of 50 regional airports was approved in May 2017. Out of the total 70 airports included in round I, 43 are regional airports to be newly operationalized. RCS-Udan operations have commenced from 13 regional airports and additional 12 regional airports are ready to receive flights. 18 regional airports still require significant upgrades. The second component is to add several hundred financially viable, capped-airfare, new regional flight routes to connect more than 100 underserved and unserved airports in smaller towns with each other as well as with well-served airports in bigger cities by using "Viability Gap Funding" where needed. Initially, three separate rounds of bidding for the award of routes will be concluded by the end of 2018. Union government's share of "Viability Gap Funding" is from the cess applied to flights to popular routes to main cities and respective state governments have also offered additional benefits to the flight operators to make UDAN-RCS viable.
The number of aircraft increased by 38% to 548 in December 2017 from 395 in 2014, and 50 aircraft are being added every year. Subsequent phases with the inclusion of seaplanes will boost the number of potential landing sites from nearly 500 airports to over five lakhs waterbodies as well as more locations along India's 7,000 km coastline. SpiceJet placed a US$400 million order for 100 of these 12-seater amphibian seaplanes.
India has 394 unserved and 16 under-served airports; out of a total of these 410 potential-target unserved and under-served regional airports, INR4500 Crore has been approved in the 2016-2017 union budget to revive and further develop 50 airports in the smaller regional towns between 2017 and 2020, 15 airports during 2017–18, another 15 airports during 2018–19, and 20 more airports during 2019–20. A total of 75 airports were operationalized for civilian flights in India since independence, the government has newly operationalized additional 36 regional airports for civilian flights including 3 civil enclaves within the army airports, with regularly scheduled flights, within the single financial year of 2016–2017, with the target to complete a cumulative total of 50 operational regional airports by the end of 2018–2019, and eventually, operationalize a cumulative total of 100 regional airports by December 2018.
Indian prime minister Narendra Modi launched the scheme on 27 April 2017 by flagging off the inaugural regional flights between Delhi and Shimla, and also between Kadapa-Hyderabad-Nanded.
Concessions to operators
The scheme will run for 10 years and can be extended thereafter.From central government
Following concessions from the Government of India:- Viability Gap Funding to subsidize the airfare.
- Concession on service tax on tickets.
- Code-sharing of UDAN-RCS flights permitted with other operators.
From state governments
- Reduction of VAT to 1% or less for 10 years.
- Coordinate with oil companies to create fueling infrastructure in airports.
- Provide free land for the development of the airport, with multimodal hinterland connectivity.
- Provide free trained security.
- Provision of water, electricity and other utilities at a reduced rate
- Provide a 20% share of Viability Gap Funding; North-Eastern states, Uttarakhand, Himachal Pradesh and Union territories to provide a 10% share only.
- State governments are encouraged to provide additional concessions.
From airport operators
- No landing, parking or other charges charged by the airport operator which could be national govt or state govt, or a third party to whom state or national government has outsourced the operation.
- No Terminal Navigation Landing Charges charged by the airport operator for the use of air traffic control assistance for landing and take off.
- Allow selected airline to manage the ground handling of flights, e.g. loading and unloading cargo or luggage, boarding and deboarding passengers, etc.
- Route Navigation and Facilitation Charges, for the use of national radar network for air navigation, applied on UDAN-RCS flights by AAI at a discounted rate of 42.40% of Normal Rates.
- Fuel subsidies: In India each state levies different taxes on the aviation fuel, and states may decide to waive off full or part of taxes and may even further subsidise the fuel.
- Other state and local subsidies: Each state or local government may offer further subsidies and benefits to the companies operating the flights.
UDAN-RCS cargo flights concession
UDAN-RCS fares
For the fixed-wing aircraft, there is a cap of maximum fare of ₹2,500 per hour of flight for 50% of the seats, connecting unserved and under-served regional airports, remaining 50% seats will be priced at market rate. Capped RCS fares will also be graded based on distance, e.g. ₹1,420 for a distance of 151–175 km, ₹1,500 for a distance of 176–200 km, and so on, with a ceiling of maximum ₹3,500 fare for a total distance of 800 km or more.For the helicopter services maximum fare is also capped at ₹2,500 for every 30-minute leg of flight. Capped helicopter fare will be graded on the time of flight, e.g., ₹2,500 for a flight of 0 to 30 minutes, ₹2,900 for a flight of 31 to 35 minutes, and so on, with a ceiling of maximum ₹5,000 fare for a total flight duration of 60 minutes or more.
Viability gap funding
The scheme entails making the routes financially viable, without insisting on the financial viability of the regional airports, by lowering the cost of flight operations and through financial support in the form of viability gap funding. VGF will be available to flight operators on specific routes for the first 3 years of operation.The demand-driven revival and enhancement of the regional airports with financially viable commercial flight routes is based on the combination of seeking firm proposals from Airlines for the names of airports they wish to fly to and MoU-bound commitment from the state governments for providing various concessions for the airport operations, such as state tax concessions, free land and security, etc. Participating states, Northeast states and Union Territories are required to sign the MoU with the union governments to share the 20% and 10% burden of VGF respectively.
To make the routes viable for commercial airlines, the union government offers flexible code-sharing arrangements, reduced excise on value-added tax on fuel and service tax. Airports, some owned by the Airports Authority of India and others by the respective state governments, will not charge the landing and parking charges and terminal navigation landing charges.
Airlines will be given Value Gap Funding raised from the RCS levy. Starting from 2017, the airfare cap and VGF in this 10-year scheme will be revised quarterly, based on Consumer Price Index for Industrial Workers.