UDAN 5.0

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Context: The Ministry of Civil Aviation has inaugurated the 5th round of the Regional Connectivity Scheme (RCS) - Ude Desh Ka Aam Nagrik (UDAN) to improve connectivity to rural and regional areas of the country and attain last-mile connectivity.

Details

About

• India is a large and diversified country with numerous remote and regional areas in desperate need of improved air connectivity.
• To solve this issue and make air travel more affordable and available to the general public, the government has launched a scheme known as UDAN (Ude Desh Ka Aam Nagrik) or Regional Connectivity Scheme (RCS).

UDAN

• UDAN launched in 2016 and has completed four rounds of successful bidding, resulting in the operation of 361 routes and 59 airports, heliports, and water aerodromes.
  • The initiative has also resulted in the creation of over 10,000 direct and indirect jobs, as well as increased tourism, trade, and economic development in the regions.
• Recently, the Ministry of Civil Aviation launched the fifth round of UDAN, called UDAN 5.0.

Objectives

• Linking new routes and bringing the air network closer to its goal of operationalizing 1000 routes and 50 additional airports, heliports, and water aerodromes soon.

Key Features of UDAN 5.0

Focuses on Category-2 and Category-3 aircraft operations

• The latest phase of UDAN focuses on Category-2 (20-80 seats) and Category-3 (>80 seats) aircraft operations that can accommodate longer distances and higher passenger demand.

Length cap removed

• The earlier stage length cap of 600 km is lifted, and there are no distance restrictions between the flight's origin and destination.
• Airlines will be able to connect additional destinations across the country as a result of this.

Increased Viability Gap funding

• The viability gap funding (VGF), financial assistance granted by the government to make the routes viable, would be capped at 600 km stage length for both Priority and Non-Priority sectors, up from 500 km previously.
• This will ensure that funds are used efficiently and that over-subsidization is avoided.

No predetermined routes will be offered

• Only Network and Individual Route Proposals proposed by airlines will be considered.
• This will give more flexibility and choice to the airlines to design their networks based on market demand and operational feasibility.

Airlines to submit an action/business plan

• The airlines will be required to submit an action/business plan after two months from the issuance of the Letter of Authorisation (LoA), wherein they will submit their aircraft acquisition plan/availability of aircraft, crew, slots, etc. at the time of the technical proposal.
• This will ensure faster operationalization of routes and avoid delays.

Encourage Competition

• The same route will not be awarded to a single airline more than once, whether in different networks or the same network.
• Exclusivity will be withdrawn if the average quarterly passenger load factor (PLF) is higher than 75% for four continuous quarters, to prevent exploitation of the monopoly on a route.
• This will prevent monopoly and encourage competition among airlines.
• This will also create more opportunities for other airlines to enter the market.

Performance Guarantee

• 25% of the Performance Guarantee, which is an amount deposited by the airlines as a security for their performance, will be encashed for each month of delay up to four months, to further incentivize quick operationalization. Earlier this deadline was six months.

Novation Process

• The novation process for routes from one operator to another is simplified and incentivized.
• Novation is a process where an airline can transfer its rights and obligations under a route to another airline with mutual consent.

Conclusion

• UDAN 5.0 is expected to bring more benefits to passengers, airlines, regions and the country as a whole. It will increase air connectivity, reduce airfares, create more jobs, boost tourism, trade and economic development, and achieve last-mile connectivity.

Must Read Articles:

UDAN Scheme: https://www.iasgyan.in/daily-current-affairs/udan-scheme-47

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1918622