Mumbai: InterGlobe Aviation Ltd-run IndiGo, and Ajay Singh-led SpiceJet Ltd will start their first UDAN flights on routes they won under the second round of the regional connectivity scheme (RCS) from July-August, two people aware of the matter said. On Tuesday, Alliance Air became the first airline to start operations under this scheme, servicing the Jammu-Bhatinda route.
IndiGo, which had won 20 proposals during e-bidding in January, will begin operating in four to six routes from July using its ATR fleet, said one of the people cited earlier. Proposal here refers to one or more routes that connect two destinations. The firm is doing a feasibility study of the other routes, this person said.
SpiceJet, which has won 17 proposals under second part of the regional connectivity scheme, is currently evaluating infrastructure and airport readiness. The airline expects to start its operations by July-August, said the second person aware of the matter.
In January, the government had awarded 325 routes to airlines and helicopters under RCS-2 which connects smaller towns, cities and less connected areas with air travel. This scheme is also known by the acronym UDAN (Ude Desh ka Aam Naagrik).
SpiceJet, which won six proposals under RCS-1, is currently operating in only four of these. The deadline to start operations is 20 March and the airline is currently reviewing the challenges in this route, the second of the two people said.
Challenges to start operations at smaller airports forces airlines to operate smaller aircraft like ATR or Bombardier.
About half of the seats under the regional connectivity scheme are capped at Rs2,500 per seat per hour to attract more passengers. The government compensates the airlines by extending viability gap funding (VGF) for which money is partly raised through levy of up to Rs8,500 per flight that operates from all non-RCS routes. The government has also increased its allocation for RCS in the latest budget to Rs1,014.09 crore for 2018-19 from Rs200.11 crore during 2017-18.
Jet Airways has been awarded four proposals under RCS-2. However, the airline didn’t respond to queries on when it is expected to start operations under the scheme.
SpiceJet and IndiGo spokespersons also declined to comment.
Zexus Air Services Pvt. Ltd-run Zoom Air, which is planning to extensively connect North-East India under UDAN, has been awarded six networks and 12 routes under RCS-2.
The airline will start its first flight under the scheme (Kolkata-Tejpur) by 15 March, the company’s chief executive Koustav Dhar said, adding that Zoom Air will look to operate on maximum routes in North-East India, both under and outside the purview of RCS.
“The government has given good incentive to airlines to run operations under the first and second round of regional connectivity scheme—for instance there is no value-added taxes (VAT) on fuel charged by government on flights under RCS routes while many airlines are also the sole operators in their routes. However, traffic has to be built over time (on these routes)," said Vishal Rampuria, who tracks the sector for HDFC Securities Ltd.
“I don’t see operating a no-frill airport as a challenge. But, scaling up (operations) beyond a point, will require better airports and landing platform depending on the popularity of the routes and the passenger traffic at the airports," Rampuria added.