UDAN Round 5.3 Reopens Bidding for Discontinued Routes Ahead of 3-Year Tenure Completion

RCS-UDAN is market driven scheme in which the unserved and underserved airstrips/airports are listed for bidding by airlines to provide connectivity. Bidding rounds are conducted from time to time for covering more destinations and routes under the scheme. Based on their assessment of demand on particular routes, interested airlines submit their proposals at the time of bidding under UDAN. An airport which is included in the awarded routes of UDAN and requires upgradation/development for commencement of UDAN operations, is developed under the ‘Revival of unserved and underserved airports’ scheme. On development and readiness of airport, Selected Airline Operators (SAOs) commence operations on the awarded UDAN routes connecting these airports. SAOs are provided financial (Viability Gap Funding or VGF) support to meet the gap, if any, between the cost of airline operations and expected revenues on such UDAN routes. So far 12 bidding cycles under 5 Rounds of UDAN have been conducted. Certain routes awarded under UDAN which got dis-continued before completion of 3-year tenure, have been offered for re-bidding under UDAN Round 5.3

Occasional delay occurs in operationalising the airports due to following reasons:

1. Delay due to land unavailability.

2. Technical and operational constraints at certain airports

3. Delay in obtaining Scheduled Commuter Operators Permit by new entrant Airlines.

4.Other issues such as non-availability of suitable aircraft, aircraft leasing issues, maintenance issues of small aircraft etc.

SAOs are also provided various concessions by Central Government, State Government and airport operators as under:

Airport operators:

i) Airport operators not to levy Landing and Parking Charges on RCS Flights.

ii) AAI not to levy any Terminal Navigation Landing Charges (TNLC) on RCS Flights.

iii) Route Navigation and Facilitation Charges (RNFC) to be levied by AAI on a discounted basis @ 42.50% of Normal Rates on RCS Flights.

iv) Selected Airline operators (SAO) allowed self-ground handling for operations under the Scheme at all airports.

Central Government:

i) Excise Duty at the rate of 2% to be levied on Aviation Turbine Fuel (ATF) purchased by SAOs from RCS Airports for initial period of three years from the date of notification of this scheme.

ii) SAOs have the freedom to enter into code sharing arrangements with both domestic as well as international airlines.

States Government at RCS Airports within their States:

i) reduce VAT to 1% or less on ATF at RCS Airports located within the States for a period of 10 years.

ii) provide minimum land, if required, free of cost and free from encumbrances for development of RCS Airports and provide multi-modal hinterland connectivity as required.

iii) provide security and fire services free of cost at RCS Airports.

iv) provide or cause to be provided, electricity, water and other utility services at substantially concessional rates at RCS Airports.;

Rs.3587 crores has so far been disbursed to the Selected Airline Operators towards Viability Gap Funding (VGF) as per the provisions of the Scheme.