Under UDAN, Air India, Air Deccan, SpiceJet, Air Odisha and Turbo Megha have got rights to fly 128 routes which will require them to cap half the seats at about 50%
New Delhi: Flights offering seats for as little as Rs2,500 will connect big cities and small town India starting next month after the aviation ministry on Thursday authorized five airlines to operate on so-called regional routes.
Inexpensive regional air connectivity under the government’s UDAN (Ude Desh Ka Aam Nagrik) scheme will allow travellers to save on time and enable the middle-class in small town India to take their first flights. The scheme’s name loosely translates as “let the common man fly”.
They will connect metros such as Delhi, Mumbai, Bengaluru and Hyderabad with 70 small cities including Kanpur, Shimla, Agra, Bathinda, Pathankot, Gwalior, Ludhiana, Bhavnagar, Diu, Jamshedpur and Puducherry.
At present no airline flies to 31 of the 70 cities.
The five airlines awarded the rights to fly are Air India, SpiceJet, Turbo Megha, Air Odisha and Air Deccan, which its original founder G.R. Gopinath has revived after selling it in 2008 to Vijay Mallya’s now-defunct Kingfisher Airlines Ltd.
For 21 months running we have had 20% plus growth in passengers… now with these efforts, we will contribute to it because more people will be able to fly,” aviation minister Ashok Gajapathi Raju said. “I think within four to six months everything (flights) will become active.”
Nearly 50% of seats on UDAN flights, covered in an hour, will be sold at about Rs2,500 and subsidised by the government.
In this phase, the subsidy will be about Rs200 crore, junior aviation minister Jayant Sinha said, adding that it was reasonable give the airline industry’s annual revenue of Rs80,000 crore.
Airports, Sinha said, have been asked to provide slots on priority to airlines trying to connect airports with no flights as mandated under international rules.
It’s likely that Bathinda (Punjab), served by Air India’s regional arm Alliance Air, will be the first destination under UDAN, followed by Shimla.
“We will be the biggest in this space, our planes and plans are both ready,” Alliance Air CEO C.S. Subbiah said.
Fares of Rs2,500 will kick off in the next fortnight on Delhi-Bathinda flights as Alliance Air closes formal agreements with the Airports Authority of India. The airline is doubling its fleet of 10 short-haul ATR turboprop aircraft this year.
SpiceJet’s chairman Ajay Singh said he will lease three more Bombardier-made Q400 planes to operate the UDAN flights it has won. The airline already has 17 Q400 planes.
An Air Odisha spokesman said it plans to start operations in the next three months. One key hurdle the government faces is funds. Airlines like IndiGo, SpiceJet, Jet Airways and GoAir have opposed the UDAN cess on airfares and have moved courts.
The cess collected from passengers on national routes has to be given to the Airports Authority of India, which will use the money to subsidise the flights. The government is hoping it will all work out.
“Availability of funds will not be an issue at all,” aviation secretary Rajiv Nayan Choubey said. A second round of routes will be connected with participation by more mainstream airlines, he said.
The former head of an erstwhile regional airline was cautious on UDAN.
“At Rs2,500, traffic will not be a problem but overall viability will be an issue.They are partially subsidising the flights, not fully. Then the aircraft needs a cluster of sectors and scale to achieve targets,” said Harsh Vardhan, who headed the now defunct Vayudoot airline. Still Harsh Vardhan said big players may be winners.
“Some new sectors will come up — established operators like SpiceJet and Alliance Air will certainly achieve what they have targeted, but for others to set up the kind of infrastructure required will take time,” he said, adding, “The success of the scheme will depend on two factors — how soon the government can make airports available and the distribution of time-bound subsidy to the operator.”
Vijayawada, Andhra Pradesh-based Air Costa, a regional airline, shut operations last month, leaving 600 employees awaiting two months’ salary.