UDAN Scheme: Benefitting Passengers, Airlines, and Unserved Regions

UDAN 5.0, regional connectivity, Ministry of Civil Aviation, Category-2, Category-3, Viability Gap Funding, airline incentives, last-mile connectivity, economic development, air connectivity.
UDAN 5.0, regional connectivity, Ministry of Civil Aviation, Category-2, Category-3, Viability Gap Funding, airline incentives, last-mile connectivity, economic development, air connectivity.
Ministry of Civil Aviation Launches UDAN 5.0 to Enhance Regional Connectivity in India

Ministry of Civil Aviation Launches UDAN 5.0

The Ministry of Civil Aviation has launched the fifth round of the Regional Connectivity Scheme (RCS) – Ude Desh Ka Aam Nagrik (UDAN), which is aimed at enhancing connectivity to remote and regional areas of the country to achieve last-mile connectivity.

Key Features of UDAN 5.0 are as follows:

  • This round of UDAN focuses on Category-2 (20-80 seats) and Category-3 (>80 seats).
  • The earlier stage length cap of 600 km is waived off and there is no restriction on the distance between the origin and destination of the flight.
  • Viability gap funding (VGF) to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas which was earlier capped at 500 km.
  • No predetermined routes would be offered. Only Network and Individual Route Proposal proposed by airlines will be considered.
  • The airlines would be required to submit an action/business plan after 2 months from the issuance of LoA wherein they submit their aircraft acquisition plan/availability of aircraft, crew, slots, etc. at the time of the Technical Proposal.
  • The same route will not be awarded to a single airline more than once, whether in different networks or in the same network.
  • Exclusivity will be withdrawn if the average quarterly PLF is higher than 75% for four continuous quarters, to prevent exploitation of the monopoly on a route.
  • 25% of the Performance Guarantee to be encashed for each month of delay up to 4 months, to further incentivize quick operationalization.
  • Airlines would be required to commence operations within 4 months of the award of the route. Earlier this deadline was 6 months.
  • A list of airports that are ready for operation or would soon be ready for operations has been included in the scheme to facilitate quicker operationalization of routes under the Scheme.
  • Novation process for routes from one operator to another is simplified and incentivized.

Guidelines for Airlines

Airlines will be required to submit an action/business plan after 2 months from the issuance of LoA (Letter of Award), wherein they submit their aircraft acquisition plan, availability of aircraft, crew, slots, etc. The same route will not be awarded to a single airline more than once, whether in different networks or in the same network. Exclusivity will be withdrawn if the average quarterly PLF (Passenger Load Factor) is higher than 75% for four continuous quarters, to prevent exploitation of the monopoly on a route. Airlines would be required to commence operations within 4 months of the award of the route, as opposed to the earlier deadline of 6 months.

Incentives for Airlines

25% of the Performance Guarantee will be encashed for each month of delay up to 4 months, to incentivize quick operationalization. The novation process for routes from one operator to another is simplified and incentivized.

Benefits of UDAN Scheme

The UDAN Scheme has benefitted a diverse set of stakeholders, including passengers who have received the benefits of air connectivity, airlines who have received concessions for operating regional routes, and unserved regions that have received the direct and indirect benefits of air connectivity for their economic development.

Minister of Civil Aviation & Steel’s Comment

Minister of Civil Aviation & Steel, Shri Jyotiraditya Scinda, has stated that UDAN has proved to be a lifeblood of many regions that are now well-connected with places across the country. UDAN 5.0 is a new and stronger version of the scheme that will raise the momentum, connect new routes, and bring the country closer to the target of operationalizing 1000 routes & 50 additional airports, heliports, and water aerodromes in the near future.

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