Uttar Pradesh Set to Invest in Civil Aviation

• 29 May 2024

Why in News?

According to the sources, the Uttar Pradesh government is targeting private investment of USD 2 billion (over Rs 16,000 crore) in the civil aviation sector.

• Apart from promoting ancillary activities, such as aviation training, aircraft maintenance, and aero-sports, the proposed investment may be used to develop and upgrade existing airstrips.

Key Points

• Under the flagship Regional Connectivity Scheme (RCS), apart from the 14 state-owned airstrips marked for immediate development, the state is taking steps to operationalise 225 routes.
  • Six airstrips namely Aligarh, Azamgarh, Chitrakoot, Shravasti, Moradabad, and Sonbhadra are being upgraded to handle the flights under the RCS.
  • The state has allocated a budget of about Rs 28,000 crore in the current financial year 2024-25 (FY25) for the civil aviation infrastructure for airstrips modernisation, land acquisition, and more.
• Uttar Pradesh witnessed a rise of 20% in the number of flyers in FY24, indicating a sharp uptick in aviation growth in leisure and business tourism.
  • The government is also promoting helicopter taxis in major tourist hotspots under the Public-Private Partnership (PPP) mode.
  • In 2023, UP Tourism signed an agreement with Rajas Aerosports And Adventures to operate heliports for 30 years between Agra and Mathura.
• UP has emerged as the most favoured tourist destination, logging a 50% jump in tourist inflow to 480 million in 2023.

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.