Airlines say many of the routes awarded to them under the scheme are not viable and are unprofitable for them.


New Delhi: Less than 50% of the routes offered to different airlines by the Ministry of Civil Aviation under the Regional Connectivity Scheme (RCS) have been made operational so far. According to the Ministry of Civil Aviation, out of the 948 selected and awarded routes under the RCS scheme to different airlines of the country, only 415 such routes have been made operational till 27 March this year.
The RCS scheme which was launched with the Indian name UDAN (Ude Desh Ka Aam Nagrik) was one of the world’s most ambitious aviation scheme aimed at making flying affordable for every Indian. When Prime Minister Narendra Modi launched the first flight between Delhi to Shimla on 27 April 2017 under the UDAN scheme, he had said that he envisions that every Indian would be able to fly affordably and that the entire country, even the remotest part, would soon be connected by air routes. He had then coined the term “Hawaai Chappal se Hawaai Jahaz”, hitting the right nerve that led the Ministry of Civil Aviation to pursue this scheme with full vigour. But since then, much water has flown. Though the Ministry has conducted four rounds of bidding and awarded 948 routes to different airlines under the scheme, just less than half of these routes have seen actual flights taking off.
The Ministry says that the regulatory authority has already made 66 under-served or unserved airports or airstrips serviceable, also made 14 aerodromes and 36 helipads operational under this scheme, but airlines have failed to fly to every awarded routes due to the lack of demand and lack of viability. The Ministry of Civil Aviation earlier this week, in a written reply to the Lok Sabha, also said, “UDAN is a market-driven scheme. Interested airlines based on their assessment of demand on particular routes, submit their proposals at the time of bidding under UDAN. Airlines are free to induct capacity with any aircraft type for selecting whatever markets and networks they wish to service and operate across the country. Thus, it is up to the airlines to provide air services to specific places depending upon the traffic demand and their commercial viability, in compliance with the relevant guidelines in this matter.”
The issue that the scheme was not picking up as per the expectation of the government was also brought to the forefront by the Parliamentary Standing Committee on Transport, Tourism and Culture. The Standing Committee on Transport, Tourism and Culture in its 308th report presented to the Parliament in February this year said: “The Committee desires that the Ministry should examine the reasons for non-commencement of the awarded routes; identify the bottlenecks in this regard; and chalk out strategic steps to timely address the issues involved.”
However, the Ministry through its reply to the Committee said that the delay in operationalizing routes are for various reasons, which includes challenging environment with low yield and high operating costs that is partly due to high cost of Airline Turbine Fuel and other services, non-availability of slots at metro airports like Mumbai and Pune, delay in obtaining Scheduled Commuter Operators Permit by new entrant airlines, non-availability of suitable aircraft, aircraft leasing issues, long lead time for delivery, maintenance issues of small aircraft, difficulties in procuring spares from abroad and sometimes due to the crunch of operating funds by the airlines.
The Ministry also said that the collapse of Jet Airways also led to the closure of some of the routes that was offered to the airlines. Glaringly, out of the 94 RCS routes awarded in the first phase of the scheme and which has completed three years’ time (the time period when the government was subsidising these routes and guaranteeing minimum number of seats through Viability Gap Funding), only 22 of them are still operational, whereas the rest have decided to stop flying to the rest of the routes awarded to them under the UDAN scheme as these routes, according to airlines, seemed unviable and non-profitable for them.
The committee in this report concluded and recommended to the ministry, “The Committee urges upon the Ministry to closely and meticulously monitor the implementation and impact of the UDAN Scheme and formulate plans and guidelines to ensure that the benefits of the Scheme actually reach the passengers, as per the spirit of the Scheme.”
The Parliamentary Standing Committee in its 304th report on Transport, Tourism and Culture also asked the Ministry of Civil Aviation to identify and operationalise routes that come under tourist destinations as they could have potential even for airlines to operate under these routes. The Ministry, however, in its own report to the Committee said that out of the 38 tourist routes awarded to the selected airlines under the UDAN scheme, only 31 have been operationalised so far, while the 17 other routes have still not been made operational by the awarded airlines.
The Committee also noted that many of the airlines are facing adverse problems of financial stress due to the Covid-19 pandemic and have recommended to the Ministry to provide support to the airlines in order ensure that the industry comes back to its full potential in the coming years.
In its recommendation, the Committee said, “The Committee also notes that an extension of benefits has been granted for a period of one year only to routes completing three years tenure. The Committee feels that helping hand should be given to the fledgling RCS-UDAN routes, considering the low number of operationalized routes and adverse impact of Covid-19 pandemic, which has resulted in lower passenger traffic and therefore, strongly reiterates its recommendation that benefits should be extended by another two years, instead of one year as granted by Ministry now.”
The Parliamentary Standing Committee on Transport, Tourism and Culture is chaired by Rajya Sabha MP from Andhra Pradesh and BJP leader T.G. Venkatesh. The Committee in total has 10 members from the Rajya Sabha and 31 members from the Lok Sabha. The 10 Rajya Sabha MPs in the Committee represent different political parties, including the Shiv Sena, Biju Janata Dal, BJP, TMC, Congress and the DMK. The 31 Lok Sabha MPs in the committee also represent the BJP, the Congress, the YSR Congress, DMK, TMC, JD(U) and the Shiv Sena.