UDAN Scheme (Ude Desh Ka Aam Naagrik) | उड़ान योजना (उड़े देश का आम नागरिक)
Ude Desh Ka Aam Naagrik (UDAN) was launched as a regional connectivity scheme under the Ministry of Civil Aviation in 2016.The Ministry of Civil Aviation (MoCA), Government of India released the National Civil Aviation Policy in 2016. One of the many objectives of this policy was to enhance the regional connectivity through monetary support and infrastructure development. Reports suggested that every 100 Rupees spent on air transport can contribute to 325 Rupees of benefits and every 100 direct jobs can result in 610 indirect jobs in the economy as whole. Also, it was found that as consumption grew in metro cities, air connectivity would be an integral part in both cargo and passenger demand.
UDAN Scheme Primary Objective
1. The primary objective of the UDAN Scheme is to facilitate regional air connectivity by making it affordable to the masses.
2. This affordability of the UDAN Scheme shall be through operations like concessions by State Governments and Union territories to airline operators to reduce cost of airlines on regional routes and reducing the gap between the cost of airline operations and expected revenues on such routes by viability funding
Guiding Principles of Scheme
The guiding principles for the UDAN Scheme are:
1. State Government Support to determine eligibility
State Government shall co-ordinate with subject matter experts to identify regional operators to drive the cost of airlines in the most efficient manner
2. Creation of alternate revenue and job creation streams
The UDAN Scheme shall create additional revenue streams and indirect job creation apart from direct job creation through provision of additional services related to airline sector
3. Demand Driven Mechanism
Airlines are supplied to operate in a competitive environment and market forces shall be left to determine the assessment of demand and supply on particular routes as stipulated by Government
4. Periodic review of UDAN Scheme
Periodic review of the scheme shall be carried out in every 3 years in order to assess the efficiency of the scheme
Key feature of the UDAN Scheme
The Airports Authority of India (AAI) is the implementing authority under this scheme
Mechanism for Financial Support Provision
Selected airline operators selected after due diligence shall be eligible for receiving the financial support under this scheme
1. Selected Airline Operators shall have the freedom to enter into code sharing agreements with domestic and international airline operators in order to increase the efficacy of the scheme. However, concessions shall only be available for the route selected as per the norms of the UDAN Scheme
2. Concession on Service Tax on airline tickets shall be 10% of the taxable value (Abatement of 90%)
3. Reduction in GST taxes on Airline Turbine Fuel (ATF) at Regional Connectivity Scheme (RCS: UDAN Scheme) airports shall be applicable for a period of 10 years from the commencing of the operation of the airport
4. Provisioning of land required for development of RCS airports at free of cost
5. Provision of security and fire services free of cost at RCS airports as per existing norms
6. Revenue sharing between States and the airline operators at 20% cap with RCS airports in North eastern states to have 10 % cap on revenue sharing
7. Selected RCS operators shall be allowed to do ground handling for the RCS flights at all airports
8. AAI shall not levy any Terminal Navigation Landing Charges on RCS operators
9. Subsidized rates for Route Navigation and Facilitation charges shall be applicable for RCS operators in RCS routes as per the provisions of AAI
Allocation for Underserved Airports
In order to promote regional connectivity, underserved airports shall be given special concession in terms of revenue sharing agreements with government and also rebates on facilities provided. This shall be done to encourage the regional connectivity at these airports in order to promote its usage. Thus, any underserved airports shall only have to allocate 30% of their annual revenue for the UDAN Scheme and the rest shall be at the airline operators discretion. However, this 30% shall be used for RCS routes to unserved airport locations
Exclusivity of Operations
Sustainability of operations is one of the key factors of the UDAN scheme. The Government of India recognizes that traffic demand on RCS routes shall be uncertain and the market risk for such routes shall be high. Such market risk can also be added by other low-cost airline operators- especially in the early stages of route development. Such uncertainty can affect the achievement of the scheme objectives. In order to encourage development along such routes. Selected Airline operators for the UDAN Scheme shall be granted exclusivity for operating airline services along RCS routes for 3 years from the commencement of operation on the RCS route. Post the expiry of the exclusivity period, other airline operators shall be allowed to operate flights on the RCS routes as per applicable rules and regulations.
Minimum Performance Specification for RCS flights
For Fixed wing aircraft, a selected airline operator shall be required to provide 50% of RCS flight capacity as RCS seats. Also, the minimum number of RCS seats in a fixed wing aircraft shall be 9 passenger seats.
For helicopters, again a selected airline operator shall be required to provide 50% of the RCS flight capacity as RCS seats.
The Number of RCS flights to be operated in a week shall be a minimum of three and maximum of 7 departures from the same RCS airport per week. This shall be part of the one-way connectivity or two-way connectivity as required by the airline operator.
Submission of Proposals
An airline operator can submit proposals satisfying the eligibility conditions to the implementing agency i.e. Airport Authority of India (AAI) with reference to Airfare Caps and viability funding caps. AAI shall follow a two half yearly cycles for inviting and evaluating proposals and thereby identifying suitable airline operators. Airline operators are advised to undertake their due diligence assessments and market analysis including the sustainability of RCS flight operations in the designated areas.
Accomplishments till date
Under this phase, 5 airline companies were awarded 128 flight operates to 70 airports (including 36 newly made operational airports)
The Ministry of Civil Aviation announced around 73 underserved and unserved airports in 2018
The ongoing UDAN Scheme 3.0 has following key features
1. Inclusion of Tourism Routes under UDAN 3 in co-ordination with the Tourism of Ministry,
2. Inclusion of Seaplanes for connecting Water Aerodromes,
3. Bringing in a number of routes in the North-Eastern Region under the purview of the UDAN Scheme.
- The official website of this scheme is www.aai.aero/en
- You will find more details about this scheme on this page: www.aai.aero/en/rcs-udan
Frequently Asked Questions
Q. Is the UDAN Scheme applicable for helicopters and Seaplanes operators?
Yes, UDAN Scheme is applicable for airline and stand-alone helicopter operators as per UDAN 1.0 rules and regulations. Additionally, from UDAN 3.0, Seaplanes has been included under the purview of the UDAN Scheme to connect Water aerodromes for additional means of transport
Q. What are the proposal submission documents required for bidding for RCS routes?
Information has to be submitted by the airline bidder bidding for RCS route are Information about the applicant, Technical Proposal, Financial Proposal, Name of Airline, Date of incorporation, Airline Operator permit, Memorandum of Association and Shareholder information. A more detailed list is available at the UDAN Scheme and the AAI websites.
Q. Are network proposals part of the UDAN Scheme?
Yes, network proposals shall be considered as part of the UDAN Scheme. Code sharing agreements with other airline operators for designated RCS routes shall be considered part of the UDAN Scheme.
Q. How shall the disbursement of funds be done for the eligible airline operators?
The disbursement of funds for airline operates under the UDAN Scheme shall be done on a month on month basis.