Five years on, Udan remains a work in progress

As of 14 December, only 403 of the 948 awarded routes awarded under the UDAN (Ude Desh ka Aam Nagrik) scheme were operational—connecting 65 airports, eight heliports and two water aerodromes—with airlines shying away from using most of the routes, wary of inadequate infrastructure, low demand, lack of manpower and capital.

Minister of state for civil aviation V.K. Singh informed Lok Sabha last week that delays in operationalization and discontinuation of various regional routes were due to non-readiness of civil airports and heliports on account of unavailability of land and infrastructure, the unsustainability of operations on certain routes, and the adverse impact of the pandemic on passenger demand on these routes.

“Ministry of civil aviation has been interacting with the stakeholders, including SAOs (selected airlines operators), state governments, etc., to review the scheme and operationalize the routes awarded under UDAN and appropriate course corrections whenever required are taken to achieve the purpose of the scheme," Singh told the lower House of Parliament on Thursday.

Singh said that the central government has released about ₹2,062.50 crore of the ₹4,500 crore earmarked for reviving existing unserved and underserved airports across the country.

The Airports Authority of India (AAI), the state-run airport operator, is the implementing agency for conducting bidding to award routes connecting underserved and unserved airports. AAI has so far held four rounds of bidding since the launch of the scheme in October 2016.

However, with airlines and airports staring at huge losses this fiscal due to the pandemic, there is a limited appetite to start new routes, an industry official said, requesting anonymity.

“The number of routes that are operational currently stands at about 40% of the total awarded routes as airlines are operating only on routes that have enough demand to make up for cost," the person said.

“From the demand perspective, price sensitivity is more pronounced in the regional routes, and thus airlines often struggle to recover their costs on regional routes," the person added.

Government subsidies on regional connectivity routes often don’t make up for the costs borne by the airlines to operate such flights as fares on such routes are often capped, thus hindering airlines’ ability to make the flights sustainable for the long run.

“Lack of air passenger traffic (demand) and affordability are key reasons why the regional connectivity scheme (RCS) has failed to take off in a sustainable way," a senior official with a prominent no-frills airline said on condition of anonymity.

“This has led many airlines, including regional carriers, to halt flights under RCS or scale down their regional operations, especially during the pandemic," the person added.

The official added that measures from state governments such as reducing taxes on aviation turbine fuel and providing additional incentives for RCS flights could encourage airlines to scale up operations under the RCS.