The most talked about, indeed one of the most important achievements of the Modi government, has been the launch of UDAN flights. A regional connectivity scheme was envisaged under the UPA regime as well, with some regional flights launched by individual airlines, but there was no centrally sponsored scheme with targeted subsidy to get the aam aadmi to board an aircraft from India’s hinterland. In UDAN (an acronym for Ude Desh Kaa Aam Naagrik), the Modi government has once again showed its socialist leanings by asking the scheduled airlines and metro passengers to pay up so that the marginalised small towner can fly. Though the big daddies of Indian aviation such as IndiGo, SpiceJet and GoAir have protested the levy, UDAN seems to have taken off well in the first phase.
The first flight under UDAN from Shimla to Delhi was launched last month with maximum 24 seats on subsidised fare on the Delhi-Shimla leg at a flat price of Rs 2,036. The subsidy amount for this flight is Rs 3,340 per seat. So even though 11 remaining seats on the ATR aircraft being used on Delhi-Shimla leg will be priced much higher than the flat fare for the first 24 seats, it still makes sense for the flyer since the fare is reasonable and cuts travel time etc significantly. This also breathes life back into the moribund Shimla airport.
UDAN is a first-of-its-kind scheme globally to stimulate regional connectivity through a market-based mechanism. Under this scheme, routes and networks were awarded to bidders who submitted valid proposals and quoted the lowest viability gap funding (VGF) from the government for such routes and network.
The UDAN scheme will connect 27 currently served airports, 12 underserved airports (which do not service a flight a day presently) and 31 unserved airports (which do not handle a single flight). So, on a net outflow of Rs 200 crore as VGF, 6.5 lakh subsidised seats would be offered by participating airlines on routes which were otherwise lying unused or were rarely connected.