Udan 5.0 scheme

General Studies Paper 2

Context: Recently, the government has launched the fifth round of the Regional Connectivity Scheme – (UDAN 5.0).

What is UDAN (Ude Desh ka Aam Nagrik) Scheme?

  • About:
    • The scheme was launched by the Ministry of Civil Aviation for regional airport development and regional connectivity enhancement.
    • It is a part of the National Civil Aviation Policy 2016.
    • The scheme is applicable for a period of 10 years.
  • Objectives:
    • Improve the air connectivity to remote and regional areas of India.
    • Development of remote areas and enhancing trade and commerce and tourism expansion.
    • Enable common people to access air travel with affordable rates.
    • Employment creation in the aviation sector.
  • Key Features:
    • Under the scheme, airlines have to cap airfares for 50% of the total seatsat Rs. 2,500 per hour of flight.
    • This would be achieved through:
      • A financial stimulus in the form of concessions from Central and State governments and airport operators and
      • Viability Gap Funding (VGF)–A government grant provided to the airlines to bridge the gap between the cost of operations and expected revenue.
        • Regional Connectivity Fund (RCF)was created to meet the viability gap funding requirements under the scheme.
      • The partner State Governments (other than UTs and NER states where contribution will be 10%) would contribute a 20% share to this fund.
    • Previous Phases of the Scheme:
      • Phase 1was launched in 2017, with the objective of connecting under served and un served airports in the country.
      • Phase 2was launched in 2018, with the aim of expanding air connectivity to more remote and inaccessible parts of the country.
      • Phase 3was launched in November 2018, with the focus on enhancing air connectivity to hilly and remote regions of the country.
      • Phase 4 of the UDAN scheme was launched in December 2019, with a focus on connecting islands and other remote areas of the country.
    • Key Features of UDAN 5.0:
      • It focuses on Category-2 (20-80 seats)and Category-3 (>80 seats)
      • There is no restriction on the distance between the origin and the destination of the flight.
      • VGF to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas; earlier capped at 500 km.
      • No predetermined routes would be offered; only Network and Individual Route Proposal proposed by airlines will be considered.
      • Thesame route would not be awarded to a single airline more than once, whether in different networks or in the same network.
      • Exclusivity of operation provided to an airline will be withdrawn if the average quarterly Passenger Load Factor (PLF) is higher than 75% for four continuous quarters.
        • This has been done to prevent exploitation of the monopoly on a route.
      • Airlines would be required to commence operations within 4 months of the award of the route; earlier this deadline was 6 months.
      • Novation process for routes from one operator to another has been simplified and incentivized.
        • Novation – The process of substituting an existing contract with a replacement contract, where the contracting parties reach a consensus.

What are Achievements under UDAN Scheme?

(As per the data released in Aug 2022 by the Ministry of Civil Aviation)

  • The scheme has also been able to provide a fair amount of air connectivity to Tier-2 and Tier-3 cities at affordable airfares and has transformed the way travelling was done earlier.
  • The number of operational airports has gone up to 141 from 74 in 2014.
  • 68 underserved/unserved destinations which include 58 Airports, 8 Heliports & 2 Water Aerodromes have been connected under UDAN scheme.
  • With 425 new routes initiated,UDAN has provided air connectivity to more than 29 States/ UTs across the country.

More than one crore passengers have availed the benefits of this scheme.

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