UDAAN Scheme: All You Need To Know

Introduction

  • UDAN is a regional connectivity scheme to promote the aviation sector 
  • Tag line of the scheme is “Ude Desh Ka Aam Naagrik” 
  • Launched by PM Mr. Modi 

UDAN Coverage

  • UDAN applicable on all flights covering a distance between 200 KM and 800 KM 
  • UDAN seats are available at subsidized rates 
  • Minimum seats per carrier is 9 and maximum is 40 per carrier 
  • There is no lower limit set for remote, hilly, security and island regions 
  • UDAN caps the fare for short distance flights 
  • Geographical means of coverage viz. North East, North, South, West and East 
  • Airports selection under UDAN operations would be done with the consultation of the state government 
  • Accordingly concessions would be made available under UDAN 
  • Most of the un served and under served airports would be covered under UDAN 
  • Tenure of UDAN scheme is fixed at ten years 

Funding

  • Viability Gap Funding (VGF) provided to airlines to kick off operations under UDAN keeping passenger fares affordable 
  • Market based model will be followed for VGF 
  • First, operators submit their proposals to implementing agencies 
  • Operators selected through competitive bidding process 
  • Reverse bidding adopted to select the lowest VGF quote 
  • Regional connectivity fund (RCF) created to meet VGF under UDAN 
  • RCF levy for domestic flights from the states is fixed at 20% 
  • Financial stimulus in the way of Central and State government concessions, tax concessions 
  • Exemptions given on landing and parking charges for airlines under UDAN 
  • Funding support given for first three years of operation only 

Limitations

  • Airlines is a luxury product and often seen as alienated from common man 
  • UDAN tries to break this idea but the subsidies given under UDAN will be a burden to Government 
  • No mechanism to monitor the beneficiaries of UDAN 
  • Regional connectivity would increase but already the existing airlines are operating flights with more passengers and exceeding their quota of regional connectivity 
  • UDAN finances and supports airlines only for three years under the perception that within three years the routes will become sustainable 
  • It does not consider the hike in fuel cost within these three years 
  • Airlines high levy of ATF tax is an area of concern 
  • Increase in air traffic due to UDAN may cause environmental hazards in the form of air pollution 

Way Forward

  • UDAN would help in reviving existing airports and air strips 
  • Employment would be generated 
  • Indian Economy would see a boost 
  • The scheme ensures growth, affordability, development and connectivity 
  • Business would enhance with quick movement of goods and export products 
  • Remote areas would get developed 
  • Commerce, tourism and trade would enhance 
  • New form of air transport in the form of small aircrafts and helicopters would increase connectivity 
  • Start up airlines will increase with new opportunities in aviation sector 
  • Incumbent airlines will get more passengers and new routes 
  • Overall, common man will get to enjoy the luxury of air transport at affordable rates under UDAN scheme
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