In a major overhaul of the UDAN programme, the Ministry of Civil Aviation has announced that airlines can now propose routes they want to fly under the new UDAN 5.0 version. The move replaces the previous system in which the Ministry predetermined the routes airlines could operate on. Another significant change is the withdrawal of ‘exclusivity’ on routes with over 75 per cent passenger load factor for four consecutive quarters to demonopolise the system.
Commenting on UDAN 5.0, Minister of Civil Aviation and Steel, Jyotiraditya Scinda, said, “This new and stronger version of the scheme will raise the momentum, connecting new routes, and bring us closer to the target of operationalising 1,000 routes & 50 additional airports, heliports, and water aerodromes in the near future.”
As per the bid document issued by the Ministry on Friday, “No predetermined routes would be offered. Only Network and Individual Route Proposals proposed by airlines will be considered.” An airline can propose a route it wants to operate, unlike earlier when the Ministry decided the routes that were up for bid.
According to a Ministry official, State governments can also suggest to airlines to place a bid on routes, and other airlines can place counter bids for the said routes as well.
An airline would be required to submit an action/business plan after two months from the issuance of Letter of Award (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, the Ministry clarified.
Airlines are compensated for losses caused by low fares through Viability Gap Funding (VGF). Along with this, the airport fee are also waived by the Airports Authority of India. At the same time, State governments provide free security, electricity, and firefighting services.
businessline had reported that the exclusivity clause is set to be dropped. As per the Ministry, exclusivity will be withdrawn if the average quarterly passenger load factor is higher than 75 per cent for four continuous quarters to prevent exploitation of the monopoly on a route. “The 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,” the Ministry said.
The UDAN 5.0 scheme covers aircraft operations of Category 2 (20–80 seats) and Category 3 (>80 seats) with no restriction on the distance between the origin and destination.
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 operationalisation of routes under the Scheme.