Surging oil price and creaky infrastructure threaten to ground India's aviation dreams even as it is poised for a perfect take-off.
India's big aviation ambition soared sky high yet again last month. In January, the government awarded 325 more routes to airlines and helicopter operators under its Regional Connectivity Scheme (RCS). The scheme, with a catchy acronym UDAN (Ude Desh Ka Aam Naagrik) - which in Hindi is let the common citizen fly - focuses on providing air connectivity to remote corners of the country.
The 325 routes have been awarded to 15 airlines and helicopter operators - who have joined the scheme for the first time - after bidding for the second round of UDAN. UDAN-II, which follows bidding for UDAN-I last March, will see revival of 56 airports and helipads in far-flung areas of India that will get connected to 36 existing aerodromes. UDAN-I had resulted in five air carriers winning the rights to fly 128 routes connecting 31 non-functioning airports in tier-II and -III cities and towns.
UDAN-II will put Kargil in the upper reaches of the Himalayas in Jammu and Kashmir's Ladakh prominently on the country's aviation map. Besides, Darbhanga in Bihar will get air connectivity to metros, like New Delhi, Mumbai and Bengaluru. Hubballi in Karnataka will be linked by air to nine other cities in the country, while Kannur in Kerala will be on the flight path of eight cities.
Under the RCS, the Union Civil Aviation Ministry awards routes to airlines with an objective to promote air connectivity. The airlines that win the routes will have to offer half of the seats on their flights at Rs 2,500 per hour (helicopter operators can offer up to 13 seats at lower fares). The remaining seats can be offered at market rates. The government will compensate the airlines joining the scheme through a viability gap funding (VGF) mechanism, for which airlines have to put in their bids. The airlines will be selected for the designated routes based on the lower VGF claimed in the bids.
This story is from the February 2018 edition of India Business Journal.
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This story is from the February 2018 edition of India Business Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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