UDAN: Air India subsidiary Airline Allied Services, SpiceJet, Air Deccan, Air Odisha and Turbo Megha - These are the five airlines which won bids to operate on 128 routes
Air India subsidiary Airline Allied Services, SpiceJet, Air Deccan, Air Odisha and Turbo Megha – These are the five airlines which won bids to operate on 128 routes in order to connect the country’s under-served and unserved airports under the Centre’s Regional Connectivity Scheme (RCS) where fares are capped at Rs 2,500 for one-hour flights. Air Odisha Aviation got a maximum number of 50 routes followed by Air Deccan (34) and Turbo Megha Airways (18). The AI subsidiary Airline Allied Services would operate on 15 routes while SpiceJet won bids for 11 routes. Interestingly, at least two of the airlines that have been awarded routes — Air Odisha and Air Deccan — had been in the news earlier. Air Odisha’s Chairman and Managing Director was arrested last June on charges of cheating while GR Gopinath’s Air Deccan was acquired by Kingfisher Airlines. The first flight under UDAN (Ude Desh ka Aam Naagrik) is expected to start next month, Civil Aviation Secretary R N Choubey said.
As many as 70 airports, including 31 unserved and 12 under-served ones, would be connected with the UDAN flights. Announcing the names of winning bidders and the routes, Choubey said 128 routes are being awarded to a total of five operators. The carriers will operate 19-78 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. On each flight, 50 per cent of the seats would have a cap of Rs 2,500 per seat/hour, Choubey said. Under UDAN, the operators would be extended viability gap funding — for which money is partly raised through a levy of up to Rs 8,500 on flights operating on major routes like Delhi and Mumbai.
The viability gap funding amount is estimated to be around Rs 205 crore per annum for the operators chosen in the first round of bidding, Choubey said. When asked how the amount of Rs 205 crore could translate to in terms of increased price on fliers on the major routes where the levy is imposed, Choubey said it would be around “Rs 50 per passenger. “That is the ballpark figure which is less than 1 percent of average ticket price,” he noted. Further, Choubey said airports coming under this round of UDAN are in “ready to fly or nearly ready to fly conditions” and the next round of bidding would commence shortly.
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Minister of State for Civil Aviation Jayant Sinha said criteria for selecting the winning bidders was based on the level of viability gap funding each of them sought per seat. The viability gap funding would be in place for three years for the airlines concerned from the date of starting operations in a particular UDAN route.
The scheme also provides for various benefits including no airport charges and three-year exclusivity on the routes. SpiceJet’s CMD Ajay Singh said the airline would not be availing viability gap funding. Amber Dubey, Partner and Head of Aerospace and Defence at KPMG in India said timely payment of viability gap funding to the operators would be key to sustainable operations. “AAI must install fool-proof monitoring mechanism to ensure no undue delays happen,” he said.
The Ministry and regulator DGCA should also allow sharing of licensed crew among the operators in order to reduce the cost of operators. Responding to a query about some airlines shutting down in recent times, Raju said, “some airlines have crashed, some are alive”. Referring to the new operators under UDAN, the Minister said, “I guess when we start anything we don’t move prophecies of doom… We wish the airlines here will be serving the Indian skies”. Airports Authority of India (AAI) is the implementing agency for UDAN.
(With PTI inputs)