Prime Minister Narendra Modi flagged off the first flight under the ambitious UDAN (Ude Desh ka Aam Naagrik) scheme today at Shimla, aimed at increasing regional connectivity. The inaugural flight was on the Shimla-Delhi route.


Under the “Regional Connectivity Scheme’, air fares on routes between towns and cities currently poorly connected will be capped at Rs 2,500 for every 500 km of travel. To get more Indians flying, service and fuel taxes have been dropped as incentive for airlines to fly less traversed routes.

 

A small levy will be slapped on existing routes to help pay for the scheme, while the government will provide funding to make the project viable and spend nearly $ 60 crore to reopen about 50 disused airports within four years.

 

Alliance Air, a subsidiary of Air India, will operate the Delhi-Shimla flight and has offered a special starting fare of Rs 2,036 only.


India is one of the world’s fastest-growing aviation markets, with around 7 crore domestic tickets sold annually and passenger numbers rising 20 % a year. Officials say raising regional air connectivity would see annual ticket sales jump to 30 crore by 2022.


Airlines were invited to start bidding to run specific routes. The five successful bidders have exclusivity for the route for three years, after which government support would tail off as the market becomes sustainable on its own. The scheme will run for 10 years.


The seating capacity of airlines under the scheme will range from 19 to 78, and half the seats in every flight will have a fare cap of Rs. 2,500 per seat per hour.


“India's air penetration is lagging its peers at similar income levels, and is at the cusp of rapid growth. UDAN will catalyse this, by encouraging capacity addition and by bringing the economic benefits of air connectivity to a level after which it becomes self sustainable. It has the potential to significantly expand the number of Urban centers driving economic growth. While it is a central government program, the state governments have an equally critical role in contributing to its success,” Manish B Agarwal of PwC India said.