What is Regional Connectivity Scheme UDAN(Ude Desh ka Aam Naagrik)

Regional Connectivity Scheme UDAN

UDAN-RCS, UDAN (Ude Desh ka Aam Naagrik) is a regional airport development and "Regional
Connectivity Scheme" (RCS) of the Government of India, with the objective of "letting the common citizen of well-served airports out of 97 non-RCS airports and 12 operational airports out of 18 participating underserved regional operational airports (Nov 2016) with regular fixed-wing scheduled flights. UDAN scheme will add to this number by expediting the development and operation finalization of India's potential target of nearly 425 unserved, underserved, and most underdeveloped regional airports with regularly scheduled flights.

However, there are several issues and criticisms such as poor infrastructure, dominance by larger airlines sand degradation of regional airlines, and slow implementation that plague this scheme. 

the country fly", aimed at making air travel affordable and widespread, to boost inclusive national economic development,

job growth and air transport infrastructure development of all regions and states of India.

UDAN full form

UDAN (Ude Desh ka Aam Naagrik)

What is PM UDAN scheme?

It is a Regional Connectivity Scheme to promote Aviation industry in India

When did UDAN Yojana start?

It was started in October 2016

The UDAN Scheme is a key component of the Prime Minister Narendra Modi's National Civil Aviation

Policy (NCAP) was released by the Ministry of Civil Aviation (India) on 15 June 2016. The

scheme will be jointly funded by the central government and state governments, several states have come on board by signing the "Memorandum of Understanding" with the union government for this scheme. UDAN RCS will connect an unspecified number of new regional routes, by operationalizing 100 regional airports by the end of the 2018-2019 financial year, with a target of 13 lakh (1.3 million) annual passenger seats, requiring annual INR200 crore Viability Gap Funding (VGF). The frequency of flights must be a minimum of 3 and a maximum of 7 per week from the same airport.

The scheme has two components. The first component is to develop new airports and enhance the existing regional airports to increase the number of operational airports for scheduled civilian flights from 70 (in May 2016, a total of 98 operational including army airports to at least 150 airports (by December 2018) with regularly scheduled flights. Initially, more than 100 underserved (no more than 7 scheduled flights per week) and unserved regional airports will be developed by December 2018, for which the initial funding of ₹45,000 million (equivalent to ₹51 billion, US$710 million or €660 million in 2019) for the enhancement of 50 regional airports was approved in May 2017. Out of the total 70 airports included in round-I, 43 are regional airports to be newly operationalized. RCS-Udan operations have commenced from 13 regional airports and additional 12 regional airports are ready to receive flights. 18 regional airports still require a significant upgrade (November 2017). The second component is to add several hundred financially viable, capped-airfare, new regional flight routes to connect more than 100 underserved and unserved airports in smaller towns with each other as well as with well-served airports in bigger cities by using "Viability Gap Funding" (VGF) where needed. Initially, three separate rounds of bidding for the award of routes will be concluded by the end of 2018.  Union government share of "Viability Gap Funding" is from the cess applied to flights to popular routes to main cities and respective state governments have also offered additional benefits to the flight operators to make UDAN-RCS viable.

Several aircraft jumped 38% to 548 in December 2017 from 395 in 2014 and 50 aircraft are being added every year. Subsequent phases with the inclusion of seaplanes will boost the number of potential landing sites from nearly 500 airports to over five lakh (500,000) waterbodies as well as more locations along India's 7,000 km coastline. SpiceJet placed a US$400 million order for 100 of these 12-seater amphibian seaplanes (December 2017).

India has 394 unserved and 16 underserved airports; out of a total of these 410 potential-target unserved

and underserved regional airports, INR4500 Crore has been approved in the 2016-2017 union budget to revive and further develop 50 airports in the smaller regional towns between 2017 and 2020, 15 airports during 2017–18, another 15 airports during 2018–19, and 20 more airports during 2019–20.[ A total of 75 airports were operationalized for the civilian flights in India since independence, the government has newly operationalized additional 36 regional airports for the civilian flights including 3 civil enclaves within army airports, with regularly scheduled flights, within the single financial year of 2016–2017, with the target to complete a cumulative total of 50 operational regional airports by the end of 2018–2019, and eventually operationalize a cumulative total of 100 regional airports by December 2018  Indian prime minister Narendra Modi launched the scheme on 27 April 2017 by flagging off the inaugural regional flights between Delhi and Shimla, and also between Kadapa-Hyderabad-Nanded.

Salient Features of the UDAN Scheme

•  GST reduction to 1% for 10 years.
•  Coordination with oil companies to facilitate refueling facilities.
•  Provide land for airport and ancillary development.
•  Trained security personnel.
• Utilities at subsidized rates.
• 20% of VGF.

Concessions provided by the Airport OperatorsLike AAI are:

At participating airports, there will be no parking, landing, or storage charges.

-Terminal Navigation Landing Charges (TNLC) are also Nil.

-It allows the ground handling by the airline selected through the bidding process.

On UDAN-RCS flights by AAI, Route Navigation and Facilitation Charges (RNFC) will be applied but on a

discounted rate of 42.40% of Normal Rates.

Concessions to operators

The scheme will run for 10 years and can be extended thereafter.

From Central government

Following concessions from the Government of India:

• Viability Gap Funding (VGF) to subsidize the airfare
• Concession on service tax on tickets.
• Code-sharing of UDAN-RCS flights permitted with other operators

From State governments

Following concessions from the participating state governments at their respective UDAN-RCS airports:

• Reduction of VAT (or GST after GST came in operation) to 1% or less for 10 years
• Coordinate with oil companies to create fueling infrastructure in airports
• Provide free land for the development of the airport, with multimodal (rail, road, metro, waterways, etc.) hinterland connectivity
• Provide free trained security
• Provision of water, electricity, and other utilities at a reduced rate
• Provide 20% share of Viability Gap Funding; North-Eastern states, Uttarakhand, Himachal Pradesh, and Union territories to provide 10% share only
• State governments are encouraged to provide additional concessions

From airport operators

Airport operators (commercial or private companies, central and state governments, or their entities such as AAI and Defence Ministry) must agree to provide the following concessions to participate in the UDAN-RCS scheme:^[

• No landing, parking, or other charges
• No Terminal Navigation Landing Charges (TNLC)
• Allow selected airlines to manage the ground handling of flights
• Route Navigation and Facilitation Charges (RNFC) will be applied on UDAN-RCS flights by AAI at a discounted rate of 42.40% of Normal Rates

UDAN-RCS Cargo flights concession

Cargo flights will be given similar benefits except no "Value Gap Funding" (VGF) will be provided.

For more info -https://youtu.be/TENePpRiF50 

Fuel Hedging in Aviation Industry (aviationhub11.blogspot.com)