The Government has received as many as 100 proposals from aviation companies under the Udan 4.2, a regional connectivity scheme (RCS) for seaplanes, small aircraft, fixed wings, and helicopters. Players like Pawan Hans, FlyBig, SpiceJet, Alliance Air and AirTaxi are among the top bidders.
A top government official told the Hindu BusinessLine that the Civil Aviation Ministry is likely to soon award most of the routes under the scheme.
The Udan 4.2 is aimed at improving last mile connectivity by bringing in smaller aircraft which include up to 19-20 seaters, fixed-wing aircraft, seaplanes, and helicopters.
Approximately 370 routes are being put in under this programme of which 100 are seaplane routes, 60-odd are helicopter routes, and the balance are fixed-wing routes.
“In total, there are approximately 100 proposals. For fixed-wing alone, the ministry has received 78 proposals. For seaplanes, too, there have been a handful of proposals. For helicopters, there are 7-8 routes, all are likely to be awarded as well,” the official said on conditions of anonymity.
The person said, “for Fixed-wing routes, we will soon start the negotiations. At least 15-20 of the total routes will be awarded to airports which have been built but no operations had begun because airlines weren’t able to operate.”
As far as the small aircraft segment is concerned, the official said there were a few rough edges in the proposals that were being sorted out. However, the ministry is ready to bear higher costs if it gives the smaller aircraft segments a push.
For Helicopters too, there are around 7-8 routes and Pawan Hans seems to have bid for those routes. In the case of seaplane routes, about a year and a half ago, SpiceJet was awarded Ahmedabad to the Kevadia route.
But it shut down its operations due to issues with the aircraft. This time, MehAir and SpiceJet are likely to have bid for the routes to Lakswadeep and the Andamans.
“The fact that the leasing cost is extremely high which cannot be appropriated for smaller aircraft, so we looked at a third model where we take on the leasing cost as part of these aircraft as part of the subsidy. The first round of that has also occurred under Udan 4.2 and we are very hopeful to be able to provide this connectivity through seaplanes and smaller sub-20 seater aircraft.”Jyotiraditya Scindia, Union Monister of Civil Aviation
Many of these routes are to tertiary airports, which do not have the infrastructure and other factors to attract major airlines. However, the lack of competition can sometimes incentivize airlines to fly to these locations.
Things can be tricky for some of the smaller airlines, which are not backed by either the government or private players. But the ministry is ready to infuse capital if it gives the smaller aircraft segments a push.
On October 21, 2016, the government unveiled the regional connectivity scheme (RCS) UDAN (Ude Desh Ka Aam Nagrik) to connect small towns with aerial routes to give the quintessential common man or ‘aam admi’ the opportunity to travel by air.
Between 2019 and 2024, 100 new airports, as well as heliports and water aerodromes, will be built to support the UDAN scheme. In addition, after four rounds of bidding, 780 valid routes have been assigned to shortlisted airlines.
The Airports Authority of India has set aside about INR 25,000 crores for five years, from 2019 to 2024, to complete the construction of 100 new airports, heliports, and water dromes.
Support from state governments comes in the form of a reduced Value-added Tax (VAT) to 1% or less for ten years to airports developed under the scheme, providing land for airports and other utilities at subsidized rates.
To boost regional flights, the scheme also calls for air caps from INR 1,420 to INR 3,500 for fixed-wing aircraft (based on distance and duration) for flights to unserved and underserved routes.
(With Inputs from Hindu BusinessLine)