Tuesday, August 11, 2020
Home Editor's picks UDAN: How the Modi government is making India's aviation sector soar

UDAN: How the Modi government is making India’s aviation sector soar

When UDAN was planned, there was quite a lot of usual criticism around the lines of why the government should intervene. But unless there was a backstop, in this case, the central government, it would have been near impossible to develop new airports and attract airlines

Earlier this week, an interesting aviation sector headline flashed on Indian media. In November 2018, the growth of the aviation sector slowed down to a 51-month low of 11%. In normal circumstances, a mature business will take 11% growth happily. For Indian aviation, it was a negative statistic – the growth had slowed down significantly.

Indian civil aviation market is slated to become the third largest market in the world behind that of the United States of America and China in another five years or so. Despite the individual airlines facing the heat of increased competition and high fuel prices, the market has been growing on the back of competitive airfares and increased demand.

In this backdrop, one of the demand drivers over the coming years in the civil aviation sector could be the Ude Desh Ka Aam Nagarik or UDAN program. Prime Minister (PM) Narendra Modi had spoken about the possibility of people wearing hawai chappals boarding hawai jahaj– how to make air travel affordable and possible for common citizens. For a country of India’s size, the air access has also been significantly limited. Many large towns do not even have an operational airport. Some which do aren’t served by regularly rostered flights.

This regional connectivity scheme was launched in 2016 where the government took the role of a market maker to broaden and deepen the aviation market. The idea was to bring on board some of the 425 odd Indian airports, which were unserved or underserved, with no regular scheduled flights. The government also planned to create a viability gap funding structure to promote flights from already connected cities and airports to the new regional locations.

- Advertisement -

When UDAN was planned, there was quite a lot of usual criticism around the lines of why the government should intervene. But unless there was a backstop, in this case, the central government, it would have been near impossible to develop new airports and attract airlines -after all, it was possible via a market mechanism, it would have already happened in all these years.

The government created the viability gap funding structure using a universal service type cross-subsidy model. A surcharge was levied on tickets on existing routes, which was then used to refund part of the ticket costs for the airlines flying on UDAN route. The participating airline would reserve a certain number of tickets on each flight at a low price – INR 2,500 for routes with flying time under one hour. The government would pay the airline a certain differential from the viability fund.

So far two rounds of UDAN route bidding has happened. The first was in April 2017. In this round, 128 new routes were awarded bringing aviation options to 43 regional airports of which 31 were unserved. Five airlines won the rights to fly on these routes. In the second round of bidding, 15 airlines, including those with helicopter operations, were awarded 325 routes. Bids for the third round were called in December 2018. The government now also plans to invite bids for international routes. This is being planned with an eye for connecting airports like Guwahati, which can be developed as India’ gateway to South East Asia.

The progress so far has been mixed. All the objectives of UDAN, as laid out before the first round of bidding, have not yet been met. Some airlines like Air Odisha and Air Deccan, which won the rights to fly in the first round, haven’t started operations in many cases. Some airports are still struggling to create the right infrastructure – clear flight paths and funnel approaches, perimeter security, and clear runways.

Yet, some cities have tasted success. Hubbali saw more than 45,000 flyers using the airport in July 2018. Nanded has seen connectivity increase, with an Amritsar flight which serves the Sikh pilgrims moving between the cities. Shirdi saw the upgrade of its existing airport and new flights were launched to several large cities, serving the pilgrimage destination. Adampur and Pathankot in Punjab and Nashik in Maharashtra have also benefited.

The Pakyong airport in Sikkim was constructed anew and opened to commercial flights earlier this year. Sikkim was so far only accessible via road, and the road closed many times a year due to bad weather. This airport, an engineering marvel, created a completely new commuting option for the hill state.

Several airports like Bhavnagar, Diu, Jalgaon, Jamnagar, and Mundra await the regularization of earlier flights awarded. Prayagraj has also been awarded several UDAN routes, which may get operationalized as the Kumbh Melanears.

Ultimately, even if a small fraction of all planned connectivity under UDAN thrives, it would have still served the purpose of expanding the Indian civil aviation landscape. The program was designed when Ashok Gajapathi Raju helmed the civil aviation ministry with Jayant Sinha as his deputy. Sinha has done most of the heavy-lifting in terms of planning, communication, and presenting the government point of view. Suresh Prabhu now leads the ministry, but Sinha continues to play an important role in the evolution of the program.

Since UDAN went live, India has added 25 new airports on the scheduled aviation map. Most airports existed earlier, but have been significantly upgraded to meet customer safety, security, and comfort standards. This infrastructure update is in line with the Modi government efforts, where public investment is leading the private industry participation.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Dhaval Patel
Dhaval Patel is a Project Management Consultant based out of Mumbai. He holds interest in Bollywood, Entertainment Industry, Politics and Public policy.

Related Articles

Trending now

The international links of Indian Communists: How India’s communists betrayed the nation

The Communist Party of India is one of the most controversial political parties in the country. Founded in 1925, CPI is alleged to have been directly involved in several anti-national activities since its inception.

People who think govt control of temples will rid them of inter-jati conflict assume that a pro-Hindu govt will always be in power

Viewing it through the single lenses of govt control, though, does not do justice to the various other aspects of society within which these temples are situated

DU Professor Apoorvanand mastermind behind the Delhi riots conspiracy, says Delhi riots accused Gulfisha

DU Professor Apoorvanand had already warned the students that riots would ensue and asked them to be prepared with stones, bottles, acid, knives and dry chilli powder

After requesting CBI inquiry in Sushant Singh Rajput death case, Rhea Chakraborty objects to the same, invokes Bihar elections

Rhea Chakraborty insinuates that Sushant's death was being isolated and blown out of proportion in wake of elections in Bihar

Indians, how they get ‘secularism’ so horribly wrong and how the atmosphere changed after Islam and Christianity entered India

Indians are generally highly intelligent. Yet when it comes to secularism, most intellectuals, media and politicians get the concept wrong, so wrong that it looks as if Indians were purposely fed wrong information.

Meet Kanta Murti, the woman who guarded a manhole and saved hundreds of lives as heavy rains flooded Mumbai

Kanta Murti, a 50-year-old pavement dweller, was seen in a viral video guarding an open manhole for 7 hours in Mumbai’s Matunga

Recently Popular

Who really is Binod? Read how one Youtube comment triggered a bizarre meme fest

The name 'Binod', which has now become the talk of the town and trending on Twitter, originated from a YouTube channel 'Slayy Point'

Sushant Singh Rajput’s brother-in-law gives a befitting reply to toxic journalism of Shekhar Gupta’s portal

Sushant Singh Rajput's brother-in-law Vishal Kirti on Sunday slammed Shekhar Gupta and his portal for toxic journalism.

Reports claim Sushant Singh Rajput’s former manager Disha Salian’s post-mortem report says she was found nude after her death, Mumbai police deny the reports

According to the post-mortem report of Disha Salian, her body was found nude, which was not revealed by the police so far

Rhea Chakraborty leaks WhatsApp conversation to accuse that Sushant Singh Rajput considered his sister Priyanka as ‘pure evil’

Rhea Chakraborty tries to prove that Sushant Singh Rajput did not like his family, releases chat messages with him

Pakistan: Maulvi rapes child reading Quran in mosque in Sindh province, caught on CCTV

Muslim Cleric in Sindh province in Pakistan on the run after video of hem raping a child inside a mosque emerges, case registered

“Delete the video or there will be negative consequences,” Chinese embassy threatens India based strategic affairs portal over a critical video on Xi Jinping

Chinese authorities were irked with the portrayal of Xi Jinping in a 'negative light' by Indian portal 'Strat News Global run by Nitin A Gokhale

Naach na jaane aangan tedha: Now Shashi Tharoor refuses to accept Rahul Gandhi could lose one more poll

Shashi Tharoor quoted a Twitter poll with just 7,716 votes, ran by a Congress functionary, to claim Congress should be voted to power

Chhattisgarh: Masarsa teacher arrested for raping a 9 year old girl in Raipur

A Maulana, Mohammed Arshad Rehmani, has been arrested in Raipur, Chhattisgarh for the alleged rape of a minor.

Pilot flies back to home turf? After weeks of political drama, Sachin Pilot says Ashok Gehlot is his leader

Rebel Congress MLA Sachin Pilot has bent the knee before Rajasthan CM Ashok Gehlot and accepted him as his leader.

Rajasthan battles policemen suicides: 6 suicides in 2 months, most recent being that of constable Yogindra Singh

The series of last two months cases in Rajasthan where policemen died of suicide, started with SHO Vishnu Dutt Vishnoi's death

The international links of Indian Communists: How India’s communists betrayed the nation

The Communist Party of India is one of the most controversial political parties in the country. Founded in 1925, CPI is alleged to have been directly involved in several anti-national activities since its inception.

Controversy in Pakistan after actress Saba Qamar shoots song in a Mosque, officers sacked

Actors issue apology in Pakistan for shooting for a song in a Lahore mosque.

Supreme Court refuses to accept ‘regret’ of Prashant Bhushan for 2009 contempt case, says proceedings will go on

While Tejpal offered an apology for publishing the interview in 2009, Bhushan said that his allegations were not referring to the financial status of the judges or their families but the lack of propriety.

People who think govt control of temples will rid them of inter-jati conflict assume that a pro-Hindu govt will always be in power

Viewing it through the single lenses of govt control, though, does not do justice to the various other aspects of society within which these temples are situated

Shah Faesal steps down as president of political party he founded, could return to administrative services

Shah Faesal has stepped down as the president of the Jammu and Kashmir Peoples Movement (JKPM).

Connect with us

239,751FansLike
425,977FollowersFollow
294,000SubscribersSubscribe