Udan has started the process of tapping India’s civil aviation opportunities fully
Six months from now, 43 cities will be mainstreamed on India’s flight connectivity grid, an outcome of the Udan scheme launched to spur regional flights covering distances up to 800 km. These include a dozen airports where limited but irregular flights operate, and as many as 31 destinations that are not connected at all despite the existence of airport facilities. The scale of India’s untapped civil aviation opportunities can be gauged by the fact that these constitute less than 10% of India’s inactive airports/airstrips — 394 out of 450 are dormant currently. The Udan scheme is a critical component of the national civil aviation policy unveiled last June. It offers viability gap funding to operators to fly smaller aircraft to such airports with a commitment to price tickets for at least half of the seats at ₹2,500 for an hour-long flight. In the first round of bids, 11 new or existing airline operators pitched for more than 200 routes. The Centre has approved 27 proposals from five players, adding 128 routes to India’s aviation map. The estimate is that this will add 6.5 lakh new seats with a subsidy of ₹200 crore.
The most heartening aspect is that these include six proposals for 11 routes that don’t seek any subsidy under the scheme, proving there is an untapped economic potential. The benefits for tourist hotspots such as Agra, Shimla, Diu, Pathankot, Mysuru and Jaisalmer — that would now be just a short flight away, replacing cumbersome road or rail journeys — are obvious. But the significant multiplier effects of aviation activity, including new investments and employment creation for the local economies of other destinations could be equally profound. Provided this model is sustainable and more regional flights come up under the scheme, the availability of slots at larger airports that would emerge as hubs could become an issue — particularly at capacity-constrained airports such as Mumbai. The second airport at Navi Mumbai may help ease congestion, but that is still years away. In cities where new airports have been developed, such as Bengaluru, abandoned old facilities could be revived as dedicated terminals for low-cost and regional flights. Separately, new no-frills airports must be encouraged where traffic is expected to hit saturation point in coming years. Recently, four new foreign investors and a few domestic players have expressed interest in managing operations at state-run airports such as Jaipur and Ahmedabad. This marks a revival in investor interest after a long lull. It is time to revisit provisions that offer existing private operators of large airports (burdened by debt) the right of first refusal on any new airport proposed within 150 km. Most interested bidders for the Navi Mumbai airport stayed away over this clause. Last but not the least, this development must start a rethink within the Indian Railways, as it could now lose traffic on some routes.
Six months from now, 43 cities will be mainstreamed on India’s flight connectivity grid, an outcome of the Udan scheme launched to spur regional flights covering distances up to 800 km. These include a dozen airports where limited but irregular flights operate, and as many as 31 destinations that are not connected at all despite the existence of airport facilities. The scale of India’s untapped civil aviation opportunities can be gauged by the fact that these constitute less than 10% of India’s inactive airports/airstrips — 394 out of 450 are dormant currently. The Udan scheme is a critical component of the national civil aviation policy unveiled last June. It offers viability gap funding to operators to fly smaller aircraft to such airports with a commitment to price tickets for at least half of the seats at ₹2,500 for an hour-long flight. In the first round of bids, 11 new or existing airline operators pitched for more than 200 routes. The Centre has approved 27 proposals from five players, adding 128 routes to India’s aviation map. The estimate is that this will add 6.5 lakh new seats with a subsidy of ₹200 crore.
The most heartening aspect is that these include six proposals for 11 routes that don’t seek any subsidy under the scheme, proving there is an untapped economic potential. The benefits for tourist hotspots such as Agra, Shimla, Diu, Pathankot, Mysuru and Jaisalmer — that would now be just a short flight away, replacing cumbersome road or rail journeys — are obvious. But the significant multiplier effects of aviation activity, including new investments and employment creation for the local economies of other destinations could be equally profound. Provided this model is sustainable and more regional flights come up under the scheme, the availability of slots at larger airports that would emerge as hubs could become an issue — particularly at capacity-constrained airports such as Mumbai. The second airport at Navi Mumbai may help ease congestion, but that is still years away. In cities where new airports have been developed, such as Bengaluru, abandoned old facilities could be revived as dedicated terminals for low-cost and regional flights. Separately, new no-frills airports must be encouraged where traffic is expected to hit saturation point in coming years. Recently, four new foreign investors and a few domestic players have expressed interest in managing operations at state-run airports such as Jaipur and Ahmedabad. This marks a revival in investor interest after a long lull. It is time to revisit provisions that offer existing private operators of large airports (burdened by debt) the right of first refusal on any new airport proposed within 150 km. Most interested bidders for the Navi Mumbai airport stayed away over this clause. Last but not the least, this development must start a rethink within the Indian Railways, as it could now lose traffic on some routes.