70 AIR­PORTS FOR UDAN

SP's Airbuz - - Table Of Contents - BY R. CHAN­DRAKANTH

“The ge­o­graph­i­cal spread of the air­ports cov­ered is in­ter­est­ing.” — P. Ashok Ga­jap­athi Raju, Min­is­ter of Civil Avi­a­tion

THE BHARATIYA JANATA PARTY (BJP), which had promised in its elec­tion man­i­festo that it would work to­wards re­gional con­nec­tiv­ity, has al­most ful­filled that. The BJP-led Na­tional Demo­cratic Al­liance (NDA) govern­ment has taken a huge step in boost­ing re­gional con­nec­tiv­ity through its Re­gional Con­nec­tiv­ity Scheme (RCS) by award­ing 128 re­gional routes to five air­lines — Al­liance Air, SpiceJet, Turbo Megha Air­ways (TruJet), Air Odisha and Air Deccan (Deccan Char­ters). Al­liance Air is a sub­sidiary of state-owned Air In­dia, and Ajay Singh-owned SpiceJet is a low-cost car­rier; while TruJet is a re­gional air­line and Air Odisha and Deccan Char­ters is a char­ter op­er­a­tors.

The NDA govern­ment’s lofty ini­tia­tive ‘Ude Desh ka Aam Naa­grik’ ( UDAN) has been rolled out. The govern­ment un­veiled the list of suc­cess­ful bid­ders and routes un­der the UDAN scheme which will make fly­ing ac­ces­si­ble and af­ford­able to the com­mon man. Com­ment­ing on the first round of RCS, Civil Avi­a­tion Min­is­ter P. Ashok Ga­jap­athi Raju said, “The ge­o­graph­i­cal spread of the air­ports cov­ered is in­ter­est­ing.”

1.3 MIL­LION SEATS CRE­ATED. “This is a unique scheme, which is com­pletely mar­ket-driven,” Jayant Sinha, Min­is­ter of State for Civil Avi­a­tion, said. “Through a cor­pus of only 205 crore, we will cre­ate around 1.3 mil­lion seats, which will kick-start the un­der­de­vel­oped re­gional avi­a­tion mar­ket.”

Jayant Sinha said that the de­ci­sion to award routes to the air­lines was taken only af­ter they gave bank guar­an­tees for the routes. In the first round of RCS, Al­liance Air has got 15 routes, which will see it touch five un­served and two un­der­served air­ports. Air Deccan has been awarded 34 routes, 10 at un­served air­ports and five at un­der­served air­ports. Air Odisha has won

50 routes. As many as 70 air­ports, in­clud­ing 31 un­served and 12 un­der­served ones, would be con­nected with the UDAN flights. The car­ri­ers will op­er­ate 19- to 78-seater air­craft.

These flights would con­nect air­ports spread across over 20 states and union ter­ri­to­ries in­clud­ing Pun­jab, Ut­tar Pradesh, Mad­hya Pradesh, Maharashtra, Andhra Pradesh, Gu­jarat, Hi­machal Pradesh, Kar­nataka, Tamil Nadu and Puducherry. The air­ports that would be con­nected un­der UDAN in­clude Bhatinda, Shimla, Bi­laspur, Neyveli, Cooch Be­har, Nanded and Kadapa.

Civil Avi­a­tion Sec­re­tary Ra­jiv Nayan Choubey said that UDAN would leapfrog In­dia’s avi­a­tion sec­tor. “From a rate of one air­port an­nu­ally, we have leapfrogged to con­nect­ing 33 air­ports in a sin­gle year,” Choubey said, adding the routes have a uni­form spread across the coun­try.

The process saw in­ten­sive bid­ding for prime routes. For in­stance, SpiceJet out­bid Al­liance Air for the Delhi-Kan­pur route, which Air In­dia was op­er­at­ing till to­day. “It is a great day for In­dian avi­a­tion,” said Am­ber Dubey, In­dia head of aero­space & de­fence at global con­sul­tancy KPMG. “This will give a huge fil­lip to in­vest­ments, tourism and job cre­ation in the in­te­ri­ors of In­dia. Good to see that the RCS routes are spread out across all cor­ners of the coun­try. Op­er­a­tors should try and syn­chro­nise their sched­ules and en­ter into code-share agree­ments with larger car­ri­ers.”

Flights un­der the RCS scheme could take off as early as April 2017 with both Al­liance Air and Air Deccan in­di­cat­ing that they plan to launch ser­vices be­tween Shimla and Delhi in April. Deccan Char­ters plans to op­er­ate Dur­ga­pur-Kolkata and Rourkela-Kolkata flights from July this year and launch flights link­ing Kullu to Delhi and Pant­na­gar to Dehradun in Au­gust. Air Odisha plans to link Bhav­na­gar to Ahmed­abad and Diu to Ahmed­abad in Au­gust, fol­lowed by flights be­tween Kadapa and Ben­galuru, Kadapa and Chen­nai, Rourkela and Bhubaneswar and Puducherry and Chen­nai among oth­ers. As a re­sult, there will soon be SalemChen­nai, Kadapa-Chen­nai, Nanded-Hy­der­abad and Puducher­rySalem flights on which at least half the pas­sen­gers will be able to fly at fares of un­der 2,500.

Ajay Singh, Chief Ex­ec­u­tive Of­fi­cer, SpiceJet, said that the air­line will in­duct three air­craft to par­tic­i­pate in the RCS. SpiceJet’s plans in­clude Puducherry-Hy­der­abad, Por­ban­dar-Mum­bai, Adampur-Delhi and Kandla-Mum­bai ser­vices from Au­gust.

MOU WITH 16 STATE GOV­ERN­MENTS. The Min­istry of Civil Avi­a­tion (MoCA) had launched the RCS-UDAN on Oc­to­ber 21, 2016, and had im­me­di­ately com­menced the e-bid­ding pro- cess to se­lect air­line op­er­a­tors for mount­ing RCS op­er­a­tions. The air­fare cap un­der RCS-UDAN for fixed-wing air­craft ranges from

1,420 for 151 kilo­me­tres to 3,500 for above 800 kilo­me­tres. The Min­istry has signed a mem­o­ran­dum of un­der­stand­ing (MoU) on RCS-UDAN with 16 state gov­ern­ments/union ter­ri­to­ries to pro­vide con­ces­sions as men­tioned in the RCS.

The UDAN scheme of­fers 50 per cent sub­sidy to air­lines on these routes, route mo­nop­oly for three years and a host of other con­ces­sions at land­ing air­ports. It ex­pects the air­lines to cap fares at 2,500 a seat an hour rate on re­gional flights.

The scheme that would be funded through the Re­gional Con­nec­tiv­ity Fund (RCF) cre­ated from levy of 7,500 and 8,500 charged to the air­lines on a per-flight ba­sis, could see un­served air­ports like Jaisalmer, Bikaner, Jal­gaon, Akola, Kunj Vi­har and oth­ers be­ing con­nected through sched­uled flights. To make it com­mer­cially vi­able for air­lines to op­er­ate flights to these air­ports at fares capped at 2,500 for one-hour flight, the govern­ment has com­mit­ted to cover any short­fall in op­er­a­tional cost through Vi­a­bil­ity Gap Fund­ing (VGF) and has also of­fered a three-year ex­clu­siv­ity to air­lines on the RCS routes. Be­sides these, it will also of­fer con­ces­sions on other ser­vices and tax re­lief on avi­a­tion tur­bine fuel (ATF) at un­der­served and un­served air­ports.

“As far as fund­ing for UDAN is con­cerned, there are ef­fi­cient ways of fund­ing it. The pro­posal we have in front of levy to the air­lines is the most ef­fi­cient and least-cost way of fund­ing, but if that poses chal­lenges, then we have other mech­a­nism too that we can use,” said the Min­is­ter. He said that his Min­istry along with the Air­ports Au­thor­ity of In­dia (AAI), was be­hind UDAN and sub­si­dies. “Those air­lines that will be par­tic­i­pat­ing in UDAN can be sure that they will get the sub­si­dies by way of VGF”. He said 15 states had al­ready inked MoU with the Min­istry for part­ner­ing in the RCS and an­other three will soon come on board.

The govern­ment is look­ing to cre­ate an RCF of 500 crore for VGF of 12 months and any short­fall would be met by AAI, which would be later re­cov­ered through a levy.

On the tus­sle with main­line car­ri­ers over levy­ing re­gional con­nec­tiv­ity charges, the Min­is­ter said: “We are very close to a so­lu­tion over this mat­ter. We had mul­ti­ple rounds of dis­cus­sion with the air­lines and the is­sue will be re­solved soon.” The Fed­er­a­tion of In­dian Air­lines which con­sists of IndiGo, SpiceJet, Jet Air­ways and GoAir, and has around 80 per cent mar­ket share, had moved the court con­test­ing that the govern­ment had no au­thor­ity to im­pose a levy in the na­ture of tax on air ser­vices. Ma­jor air­lines op­pos­ing the govern­ment’s move had put a ques­tion on VGF.

THE GOVERN­MENT IS LOOK­ING TO CRE­ATE AN RCF OF 500 CRORE FOR VI­A­BIL­ITY GAP FUND­ING OF 12 MONTHS AND ANY SHORT­FALL WOULD BE MET BY AAI, WHICH WOULD BE LATER RE­COV­ERED THROUGH A LEVY

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