UDAN 2.0 – ECONOMY

UDAN 2.0 – ECONOMY

NEWS: The Centre has begun formulating the draft for the ‘UDAN (Ude Desh ka Aam Naagrik) 2.0’ scheme.

 

WHAT’S IN THE NEWS?

Introduction to UDAN 2.0

  • The Indian government is developing a draft for "UDAN 2.0" to enhance air connectivity in remote areas.
  • The initiative aims to establish a cost-effective airport infrastructure to improve last-mile connectivity.
  • UDAN, an abbreviation for "Ude Desh ka Aam Naagrik," was initially launched in 2016 and is set to continue beyond 2026 under the new version.

Objectives of UDAN 2.0

  • Support last-mile air connectivity through efficient use of underutilised airstrips.
  • Develop and operate over 100 currently underutilised airstrips, with a focus on cost-effectiveness.
  • Enable smaller regional airports to sustain financially viable operations.
  • Reduce operational costs while maintaining efficiency and service viability.

Current Progress Under the Existing UDAN Scheme

  • 86 aerodromes have been operationalised under UDAN, including:

·         71 airports, 13 heliports, 2 water aerodromes.

  • Significant growth in air connectivity: The number of operational airports in India increased from 74 in 2014 to 157 in 2024.
  • Over 1.44 crore passengers have travelled under the UDAN scheme across more than 2.8 lakh flights since its inception.
  • The government’s target is to further increase operational airports to 350-400 by 2047.

Strategic Roadmap for Site Selection

  • A clear roadmap has been laid out to identify viable airstrips out of over 100 potential sites.
  • Selection criteria include:

·         Proximity to significant populations.

·         Presence of local industries.

·         Access to popular tourist destinations.

  • Focus is on identifying airstrips that promise financial viability for flight operations.

Reducing Running Costs for Regional Airports and ALGs

  • Proposal to decrease the annual operational costs of smaller regional airports and Advance Landing Grounds (ALGs).
  • The current cost for running such facilities is estimated at ₹7-10 crore per annum.
  • Technological interventions are being explored to:

·         Reduce expenses.

·         Increase operational efficiency.

  • Lowering costs will make these airports more sustainable under UDAN's financial structure.

Simplifying Regulations and Infrastructure Requirements

  • UDAN 2.0 aims to streamline operational regulations for airlines, helicopters, and seaplane operators.
  • Recent regulatory relaxations for seaplane operations are highlighted as an example of easing infrastructure requirements.
  • Goal: Facilitate flight operations to tier-III and tier-IV cities while maintaining affordable fares.

Lowering Entry Barriers for New Operators

  • Emphasis on minimizing entry barriers for:

·         New airlines, Helicopter services, Seaplane and light aircraft operators.

  • High operational costs are identified as the primary barrier for new entrants in this market.
  • Incentivising increased participation from operators is essential to provide affordable connectivity.

Funding and Support Mechanisms

  • The original UDAN scheme follows a market-driven model allowing airlines to bid on routes after assessing demand.
  • Incentives provided include:

·         Viability Gap Funding (VGF) to offset initial losses.

·         Concessions from airport operators and both central and state governments.

  • These measures aim to make underserved regions financially appealing for airlines.

Impact and Achievements of UDAN to Date

  • The scheme has activated 601 routes, including helicopter routes, significantly improving regional connectivity.
  • It has been instrumental in doubling the number of operational airports in India.
  • UDAN’s model demonstrates the feasibility of a regional air connectivity initiative with government support, encouraging a sustainable aviation market in remote areas.

Future Aspirations for Air Connectivity

  • The Centre’s ambition is to increase the number of operational airports to 350-400 by 2047, reflecting a long-term vision for robust regional air connectivity.
  • Further development under UDAN 2.0 will focus on creating a seamless, affordable, and sustainable air travel network in rural and underserved regions of India.

Key Takeaways

  • Financial Viability: Reduction of operational costs and easing of regulations will be pivotal in UDAN 2.0’s success.
  • Targeted Development: Identifying strategic airstrips for immediate development based on population, industry, and tourism will drive the selection process.
  • Expansion Goals: The government aims to establish a comprehensive network of regional airports, with a strong emphasis on increasing the accessibility of tier-III and IV cities.
  • Sustainability: Focus on creating a financially sustainable model for regional air connectivity that balances affordability with operational efficiency.

Source: https://www.thehindubusinessline.com/economy/logistics/india-kicks-off-the-process-to-formulate-udan-20/article68905243.ece