Challenges Faced by Regional Connectivity Scheme

• 02 Aug 2023

For Prelims: Challenges Faced by Regional Connectivity Scheme, UDAN Scheme, Regional Connectivity Scheme.

For Mains: Challenges Faced by Regional Connectivity Scheme.

Source: TH

Why in News?

UDAN, a Regional Connectivity Scheme (RCS) of the Ministry of Civil Aviation is facing challenges due to many airports built under the scheme not being able to be operationalized.

• Despite the claims of building 74 airports, only 11 greenfield airports have become operational since May 2014.

What is the Regional Connectivity Scheme?

• About:
  • UDAN (Ude Desh Ka Aam Nagarik) was launched by the Ministry of Civil Aviation for regional airport development and regional connectivity enhancement.
  • It is a part of the National Civil Aviation Policy 2016.
  • The scheme is applicable for a period of 10 years.
• Objectives:
  • Improve the air connectivity to remote and regional areas of India.
  • Development of remote areas and enhancing trade and commerce and tourism expansion.
  • Enable common people to access air travel with affordable rates.
  • Employment creation in the aviation sector.
• Key Features:
  • Under the scheme, airlines have to cap airfares for 50% of the total seats at Rs. 2,500 per hour of flight.
  • This would be achieved through:
    • A financial stimulus in the form of concessions from Central and State governments and airport operators and
    • Viability Gap Funding (VGF) – A government grant provided to the airlines to bridge the gap between the cost of operations and expected revenue.
      • Regional Connectivity Fund (RCF) was created to meet the viability gap funding requirements under the scheme.
  • The partner State Governments (other than UTs and NER states where contribution will be 10%) would contribute a 20% share to this fund.

What are the Phases of UDAN Scheme?

• Phase 1 was launched in 2017, with the objective of connecting underserved and unserved airports in the country.
• Phase 2 was launched in 2018, with the aim of expanding air connectivity to more remote and inaccessible parts of the country.
• Phase 3 was launched in November 2018, with the focus on enhancing air connectivity to hilly and remote regions of the country.
• Phase 4 of the UDAN scheme was launched in December 2019, with a focus on connecting islands and other remote areas of the country.
• Phase 5 was launched in April 2023, with a focus on Category-2 (20-80 seats) and Category-3 (>80 seats) aircrafts with no restriction on the distance between the origin and the destination of the flight.

What are the Challenges to the RCS Scheme?

• Commercial Viability:
  • Many of the routes identified under the scheme have been found to be commercially unviable for airlines. The low demand for air travel on certain routes makes it difficult for airlines to operate profitably, even with subsidies provided under UDAN.
  • Airport development under RCS involved launching 479 routes to revive under-utilized airports. However, out of these, 225 routes have ceased operations.
• Infrastructural Constraints:
  • The lack of adequate airport infrastructure in some of the remote regions poses challenges for airlines.
  • Many airports require upgradation and improvements to meet safety standards and handle increased air traffic.
• Subsidization of Air Travel:
  • The RCS aimed to make air travel affordable by providing subsidies and viability gap funding to airlines operating on selected routes. However, the scheme faced issues as some routes were found to be commercially unviable despite the subsidies.
• High Operating Costs:
  • Airlines operating in remote areas often face higher operating costs, including increased fuel expenses, maintenance costs, and logistical challenges, which can affect their profitability.
• Airfare Caps:
  • The cap on airfares for RCS flights can impact the revenue potential of airlines, especially when operational costs are high. It may discourage airlines from operating on certain routes.
• Passenger Awareness:
  • Lack of awareness among potential passengers about the availability of air travel options under UDAN can limit demand and utilization of regional air services.

Way Forward

• The Regional Connectivity Scheme played a significant role in airport development, but challenges related to commercial viability and airlines' sustainability have hindered its overall success.
• As the aviation sector continues to evolve, addressing these issues will be crucial to achieving sustainable air connectivity for smaller cities and regions across the country.
• Addressing these challenges requires a collaborative effort from the government, aviation industry stakeholders, and local authorities.
• Enhancing airport infrastructure, streamlining subsidy disbursal, addressing operational constraints, and promoting regional air travel awareness are key areas that need attention to ensure the success and sustainability of India's UDAN Regional Connectivity Scheme.