Launched in October 2016, the UDAN scheme or ‘Ude Desh ka Aam Naagrik’, aimed to uplift regional air connectivity of the country. It had offered air travel with affordability by making connections for many underserved and unserved airports across India. However, to date, it has just touched the very scratch of what’s needed, concluded ICRA – an Indian credit rating and research company. In fact, Vande Bharat Express trains have become a big competitor to UDAN, particularly for short distances.
UDAN Scheme’s Goals and Structure
The UDAN scheme was designed with the vision of improving connectivity to remote parts of India by offering airlines subsidies to operate on routes connecting smaller, underserved airports. Viability gap funding is provided by the government to sustain airlines on these routes and aims to make air travel affordable for an average citizen. Flights less than 500 km: The airfare is capped at Rs. 2,500 for 50% of seats on eligible routes. It was considered an economy proposition to make regional traveling across India by saving the mammoth backlog of passenger load on important routes, and providing regional economic uplift in smaller towns and cities.
However, all these hopes, the scheme was not free from various troubles that stalled it from popular usage.
Effect on UDAN By Vande Bharat Trains
One of the chief worries about ICRA is the presence of Vande Bharat Express trains, which so far has been offering semi-high-speed operations on a few routes that were exactly the same route UDAN was seeking to obtain. Kinjal Shah, Senior Vice President and Co-Group Head, ICRA, said these are trains, which can be much more affordable and efficient ways of travel on shorter routes where air travel becomes costly. Therefore, the Vande Bharat Express trains are proving to be a stiff competition to regional air travel, particularly on routes that cover less than 500 kilometers.
From its own analysis, ICRA showed that with such lofty UDAN goals, the overall air travel penetration, according to ICRA, still hovers around only 1-4% with regional routes and as more and more passengers can be carried by the likes of Vande Bharat trains at almost half the prices than even an off-peak UDAN fare, one can imagine for distances below one and a half hours; people prefer railways.
Barriers to UDAN’s Expansion
Several factors have acted as constraints towards the complete exploitation of the UDAN scheme. These are
1. Viability Gap Funding very limited
The viability gap funding under the UDAN scheme is available for a maximum period of three years. It must operate without the subsidy amount in such a case and this can end up being costlier because passenger traffic in such routes may not pick up. According to Shah, many airlines that won the first set of the UDAN route bids have not operated due to lack of long term subsidies and low passenger traffic.
2. Airfare Caps and Route Viability
Though the scheme has capped the airfares to Rs. 2,500 for flights within a distance of 500 km, abolition of these caps after three years is making the routes unviable for airlines. Reduction in PLF – percentage of seats filled – makes it all the more difficult for airlines to make the routes viable without constant support.
3. No New Routes
The second significant issue is the very slow new route additions to the UDAN scheme. Expanding the scheme will increase passenger traffic and make regional air travel more interesting. But without adding new routes annually, the existing routes will not expand significantly in terms of passengers.
4. Awareness and Demand
Though the scheme has many benefits, most people have not recognized UDAN to change their options while traveling. That is why the increase is slower than what was initially anticipated, particularly for regions that the scheme was initially targeting for development.
The Future of UDAN and Regional Connectivity
The analysts at ICRA argue that, in the absence of more uniform expansion in route numbers and better measures of awareness, this scheme of UDAN is less likely to take off. This is because alternative modes of transport cheaper than air transport would continue to dent its growth, especially when rail infrastructure was properly connected in any region.
Yet the government is still very keen on regional air connectivity. The scheme is encouraged by tax concessions, reduced landing fees, and other incentives extended by the Airports Authority of India to the airlines. This is in the effort to make regional air travel more attractive given the rising competition from other transport modes.
Conclusion
In conclusion, although the UDAN scheme was intended to revolutionize regional air connectivity in India, it has progressed at a slow pace and faced numerous challenges. Limited viability gap funding, airfare caps, and competition from cost-effective Vande Bharat Express trains have all been obstacles to its success. Though these failures would force the government to abandon regional air travel, these hurdles, and lack of awareness, as well as less routes expansion, have acted as a stumbling block for growth to the extent anticipated from UDAN. Absent this change, growth over time may run below UDAN’s potential.
Refer:
Economic Times, Link to article
Also read : Bullet Train Breakthrough: Rail Minister Reviews Ahmedabad-Mumbai Corridor Track Slab Production