The regional air connectivity scheme or Udan (Udega Desh ka Aam Nagrik), which has been in operation on domestic routes for more than a year now, is likely to be extended on the international circuit covering neighbouring countries, but permits will be given to only domestic carriers and not international ones at the start.
Sources in the civil aviation ministry told FE that though international carriers have evinced interest in the proposed Udan scheme for overseas routes, the domestic carriers have opposed it and the ministry also thinks that initially only domestic carriers should be allowed to participate in it.
“There could be an argument for a level playing field for all airlines. But the thinking is to start with domestic airlines only. It could be domestic carriers now and international players can join in later. We are really moving fast on international Udan and the bidding could be held sometime in September or October,” a civil aviation ministry official said.
Udan is basically a subsidised travel scheme where fares for a specified number of seats is capped and the government provides a viability gap funding (VGF) to the carriers to make up for the below-market pricing. The aim is to connect smaller places through air network by using under-served and unserved airports.
Now the government is thinking of extending the scheme on overseas circuits — connecting some smaller domestic centres with countries in the neighbourhood.
The Assam government was the first to evince interest to fly passengers to Asean countries from Guwahati by offering financial support. Now, Andhra Pradesh has also approached the ministry to connect Vijayawada to cities like Singapore and Dubai.
SpiceJet has shown interest in flying on new international routes under the Udan model. At present, low-cost carrier AirAsia is operating daily flight services to Kuala Lumpur from Bhubaneswar with a subsidy from the state government on a per-flight basis. The airline could add more routes from the state capital to Colombo in Sri Lanka and Bangkok in Thailand. This is solely on the initiative of the Odisha government.
Under Udan for domestic routes, fares for 50% of seats are capped at Rs 2,500 for an hour-long flight and VGF is provided by the central government. The state governments waive airport charges and taxes on aviation turbine fuel.
While the capped ticket price for international Udan and number of seats on which it will be applicable are still to be worked out, here the VGF will be borne solely by the state governments concerned.