About the scheme

• In 2017, the Ministry of Civil Aviation launched the Regional Connectivity Scheme (RCS) “UDAN” (Ude Desh Ka Aam Naagrik) which aims at providing connectivity to un-served and under-served airports of the country through revival of existing air-strips and airports to make flying affordable to the common man who want to travel to and fro the Tier 2 and Tier 3 cities of the country.
• UDAN has a unique market-based model. Airline routes are allocated to operators selected through a competitive bidding mechanism. 
• Under the scheme, nearly half of the seats in UDAN flights are offered at subsidised fares (Rs 2,500 for per hour flight) and the participating carriers are provided a certain amount of viability gap funding (VGF) – an amount shared between the Centre and the concerned states.
• The government said VGF will be reduced if passenger load factor remains high and will be discontinued after 3 years when the route becomes self sustainable.
• The scheme also offers waiver of certain statutory charges and taxes on jet fuel to companies in order to offer affordable connectivity.
• The airport that will be renovated under this scheme will be chosen after referring to the respective State government. Together with the State government the Central government will revive the dysfunctional and unserved airports of the country.
• The Airports Authority of India (AAI) is designated as the Implementing Agency under this Scheme.
• The scheme is now in its fourth phase with focus on bringing connectivity to priority areas like North East India, Jammu and Kashmir, Ladakh, hilly states in other parts of the country, and islands. Under UDAN 4, the operation of helicopters and seaplanes have also been incorporated.

Why in News?

• According to information shared by the Ministry of Civil Aviation before a Parliamentary panel, only one out of four routes under the UDAN scheme have survived after completing the government’s subsidy period of three years.
• Of the 94 RCS-Udan routes that have completed 3-year tenure till 30.11.2021, only 22 routes are in operation.
• The government expected that after the expiry of the three-year subsidy period, airlines would be able to sustain the routes without outside support. 
• While some airlines like the Hyderabad-based TruJet have approached the government for an extension of the subsidy period, their request has been declined but the government has offered to extend certain benefits for one year.
• Since 2017, there have been seven rounds of bidding for routes during which 948 have been awarded to airlines and helicopter operators. Of these 403 routes have commenced operations. Of the 154 unconnected airports (including 14 water-aerodromes and 36 heliports have been identified for operation of RCS flights) planned to be revived, 65 have resumed flights.
• Asked why all the awarded routes have not commenced flights, the Ministry has cited several challenges. These include difficult airline business which has low yield and high operating costs, lack of slots at congested airports like Delhi and Mumbai, non-availability of smaller planes and maintenance issues which require procurement of spare parts from abroad. 
• The government has also said there have been delays in completing airport development work due to lack of funds and non-availability of land.

Reference:

1. https://www.aai.aero/en/rcs-udan