Govt clears Rs4,500 crore for 50 regional airports under Udan scheme

New Delhi: The Union cabinet on Monday approved a plan to spend Rs4,500 crore to develop or upgrade 50 under-served or unserved airports and airstrips to boost the aviation ministry’s regional flying scheme Udan.

At least 15 airports or airstrips would be revived during 2017-18 and 2018-19 each, while 20 airports or airstrips would be revived during 2019-20, the government said in a late evening statement.

“As an outcome of the approval, small cities/towns shall be connected on commencement of operation of flights to under-served/un-served airports. It will further boost the economic development in these areas as well as the surrounding areas in terms of job creation and related infrastructure development,” it added.

Some of these airports are state government-owned, while others belong to the Airports Authority of India, or AAI.

Airlines will provide the names of the airports they plan to fly to, based on which airports will then be modernized.

The revival will be “demand driven”, depending upon firm commitment from airline operators as well as from the state governments for providing various concessions as airports will be developed without insisting on financial viability, the government said.

The announcement for making adequate provisions for the revival of the unserved and underserved airports was made by the finance minister in the Union budget 2016-17 for the Udan scheme.

Udan, the regional aviation scheme which will be in operation for 10 years, envisages providing connectivity to unserved and underserved cities and towns by reviving existing airstrips and airports.

This would be achieved by providing a financial stimulus in the form of central and state government concessions, as well as viability gap funding for interested airlines to kick off operations while ensuring passenger fares are kept affordable.

The fare for a one-hour journey of about 500km on a fixed-wing aircraft or a 30-minute journey on a helicopter will be capped at Rs2,500, with proportionate pricing for routes of different lengths and duration.

To reduce the cost of operations, the centre will provide concessions in the form of reduced excise on value-added tax, or VAT, service tax and flexibility in code sharing at airports under the regional connectivity scheme.

State governments would have to lower the value-added tax on jet fuel to 1% or less, besides providing security and fire services free of cost and electricity, water and other utilities at substantially concessional rates. 

Landing and parking charges and terminal navigation landing charges will not be imposed by the airport operator.

Many regional airlines have failed in the last decade.

These include Paramount Airways, Air Mantra and MDLR Airlines.

Another regional airline Air Costa suspended its operations indefinitely this week.