Union Budget 2020 for aviation: Finance Minister Nirmala Sitharaman in her Budget 2020 speech said that the Modi government will develop 100 new airports as a boost to the UDAN scheme by the year 2024. The government has allocated an amount of Rs 1.7 lakh crore under the head of transport infrastructure for the fiscal year 2020-21. The government has a target to increase the number of aircraft fleet from the present number of 600 to 1200 by the year 2024 under the UDAN scheme, Sitharaman informed.
The announcement to develop 100 more airports under the UDAN scheme is a very good initiative of the government and it will boost the air infrastructure in the country, said Anita Rastogi, PwC Partner.
UDAN, or Ude Desh Ka Aam Nagrik, is a regional air connectivity scheme launched by the Modi government in April 2017. As the name suggests, the scheme aims at providing affordable air connectivity to the common citizen of the country residing in small towns and cities across the country. The government had allocated Rs 480 crore in the financial year 2019-20 for UDAN, hiking it from Rs 441 crore apportioned to it in FY 2018-19.
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The scheme envisages connecting tier 2 and tier 3 cities with their metropolitan counterparts and revive small airports at the same time. A maximum fare of Rs 2500 for one hour of flight was touted as the highlight of the scheme with the government subsidizing the rest for the airlines. The government auctioned exclusive routes to individual airlines on which airlines are allowed to ply exclusively with a share of seats reserved for the subsidized fare. The scheme is funded by both the central and the state governments with the latter coughing up 20% of the funds. The government came under heavy criticism for levying a surcharge on the fare of all domestic passengers to make up for the subsidy provided under UDAN.
Almost 3 years after its launch, the scheme faces structural problems with many small airlines waiting in the wings to actually start operations on the designated routes. The government has also cancelled licenses of many airlines including Air Deccan and Air Odisha in the past owing to their poor performance. The underlying problems also include the dirth of infrastructural support for small airlines which are not faring well in comparison to the heavyweights like Spicejet and Indigo. The government also faces the quandary of lack of bidders on many zeroed in routes.