UDAN 5.0 Scheme | 24 Apr 2023

Why in News?

Recently, the government has launched the fifth round of the Regional Connectivity Scheme – UDAN (UDAN 5.0).

What is UDAN (Ude Desh ka Aam Nagrik) Scheme?

• About:
  • The scheme 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.
• Previous Phases of the 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.
• Key Features of UDAN 5.0:
  • It focuses on Category-2 (20-80 seats) and Category-3 (>80 seats) aircrafts.
  • There is no restriction on the distance between the origin and the destination of the flight.
  • VGF to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas; earlier capped at 500 km.
  • No predetermined routes would be offered; only Network and Individual Route Proposal proposed by airlines will be considered.
  • The same route would not be awarded to a single airline more than once, whether in different networks or in the same network.
  • Exclusivity of operation provided to an airline will be withdrawn if the average quarterly Passenger Load Factor (PLF) is higher than 75% for four continuous quarters.
    • This has been done to prevent exploitation of the monopoly on a route.
  • Airlines would be required to commence operations within 4 months of the award of the route; earlier this deadline was 6 months.
  • Novation process for routes from one operator to another has been simplified and incentivized.
    • Novation - The process of substituting an existing contract with a replacement contract, where the contracting parties reach a consensus.

What are Achievements under UDAN Scheme?

(As per the data released in Aug 2022 by the Ministry of Civil Aviation)

• The scheme has also been able to provide a fair amount of air connectivity to Tier-2 and Tier-3 cities at affordable airfares and has transformed the way travelling was done earlier.
• The number of operational airports has gone up to 141 from 74 in 2014.
• 68 underserved/unserved destinations which include 58 Airports, 8 Heliports & 2 Water Aerodromes have been connected under UDAN scheme.
• With 425 new routes initiated, UDAN has provided air connectivity to more than 29 States/ UTs across the country.
• More than one crore passengers have availed the benefits of this scheme.

Source: PIB