The Indian aviation sector has been witness to a complete transformation over the last decade, primarily because of the ambitious UDAN initiative of the Government of India. The country’s operating airports have increased nearly twofold as the nation now boasts of 157 operational airports compared to 74 in 2014. The success of the UDAN scheme, which aims at regional air connectivity improvement and making air travel more accessible to the general public, is an undisputed fact.
Indian aviation soars with UDAN initiative
Launched by the Ministry of Civil Aviation, UDAN is one part of a much larger effort to develop infrastructure in more underserved rural and remote areas. India will mark its seventh anniversary under the scheme with the goal of raising its number of airports to between 350 and 400 in 2047. It will be expanding to meet the demand for domestic air travel as well as to integrate regions long considered challenging to reach by air.
Over the last ten years, the air traffic in the domestic market has grown to more than double with aggressive fleet expansion by Indian airlines and rapid growth of regional connectivity. With a market-driven approach, UDAN has enabled the airlines to review demand on specific routes and present proposals during rounds of competitive bidding. A significant number of new routes have been successfully developed with this model, especially in underserved areas.
There is a success factor in the focus of UDAN on unserved and underserved airports itself, where the air travel options have been improved for millions of Indians. Under this scheme, regional carriers like Flybig, Star Air, IndiaOne Air, and Fly91 thrived with sustainable business models and are contributing to the development of an all the more vibrant ecosystem for regional air travel. Their growth thus underscores the potential for the small airlines to play critical roles in connecting small towns to big cities.
The UDAN scheme picked up fast since the first flight took off from Shimla to Delhi on April 27, 2017. The growth has been tremendous with the help of continued support by the government. Air lines have started several routes, which were thought not to be feasible earlier. AAI and state governments also have rendered considerable support to the scheme by providing a plethora of incentives for airlines flying RCS routes.
To attract airlines to operate on less profitable routes, the government has waived landing and parking fees on RCS flights, while the AAI has exempted such flights from Terminal Navigation Landing Charges. Besides, airlines get a reduced Route Navigation and Facilitation Charge, therefore yet another saving of operational expense. There is the escutcheon of permitting the incise duty on Aviation Turbine Fuel, at RCS airports to stay low at 2 percent for three years and several states having reduced Value Added Tax on ATF to 1 percent or less for up to ten years, that has resulted in much greater financial ease of operating flights on less lucrative routes.
This scheme also aims at boosting tourism and regional economies, mainly in the Northeast. UDAN 3.0 has been one of the newer phases of this scheme that brought many new tourism routes connecting various destinations in the region and gave a huge boost to the local economies as well as hospitality sectors. Many of the remote areas of the region have now become easy to explore because of these routes and added to regional travel growth.
The government also announced UDAN 5.1, where the aim is to scale up the helicopter service scenario in the hilly and inaccessible regions. The tourism sector in such areas will once again gain momentum and be more competitive as fewer and distant areas will provide air travel that is faster and more effective. Helicopter routes will also help to stimulate local economic development through better connectivity for the people of those areas and access to basic services.
Looking forward, the Indian aviation sector stands bright. Indian airlines have placed orders with overseas manufacturers for over 1,000 new aircraft that are to be delivered over the next 10-15 years. Adding those to the additional growth of the UDAN initiative, the present fleet of around 800 aircraft will see a huge addition, offering traveling freedom to millions of citizens across the country.
Pushing for better infra and connectivity, UDAN Scheme indicates how serious the government is with making air travel possible in all of India’s remote and underserved regions. By the ambitious targets, the next two decades promise to bring even greater advancements in the Indian Aviation sector with the potential to transform the air travel system across the country.
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