News How Government's New UDAN Aviation Scheme Is Going To Give You A...

How Government’s New UDAN Aviation Scheme Is Going To Give You A Big Reason To Smile

To boost air travel between smaller cities, fares for one-hour flights will be capped at Rs. 2,500 in the new UDAN scheme that is likely to launch in January.

The UDAN scheme (an acronym for Ude Desh Ka Aam Naagrik or “helping the average Indian fly”) has been devised to increase connectivity.

first-florida-departs-commercial-airline-flight-from_0ab5342e-9768-11e6-98f6-96638e85be2b

Here’s how the scheme works :

The government has identified airports that are either unused or under-utilised, even though they have infrastructure like a terminal building and air traffic control towers. It has also committed to spending Rs. 4,000 crore ($598 million) to reopen 50 disused airports within four years.

The UDAN-vetted airports include Bikaner and Jaisalmer in Rajasthan, Bhavnagar and Jamnagar in Gujarat, Bhatinda and Pathankot in Punjab, Allahabad in Uttar Pradesh, and Lakhimpur and Jorhat in Assam.

Airlines will be asked to bid for routes that connect small towns to cities. Fares for one-hour flights will be capped at Rs. 2,500 and taxes will be kept very low. If the airline’s cost of a seat exceeds this amount, the government will pay the difference – by collecting more from airlines operating on profitable routes. In technical terms, this is Viability Gap Funding.

1468059142_air-india-indigo-aviation-india

So far, two options have been discussed :

  • Either the government charges a 2 per cent cess from passengers flying on profitable routes
  • or it asks airlines to pay Rs. 8,000 every time they land at an airport in a major city or metro.

Airlines have not commented officially but many are apprehensive that it will push up their costs and fares on profitable routes like Delhi-Mumbai.

“We have already clarified from the ministry, based on our own discussions with the Law Ministry. We think that within the current legislation that we have, we can look forward to this kind of arrangement,” Jayant Sinha, the junior minister for aviation, told reporters.

The ministry’s top bureaucrat, RN Choubey, said airlines could now start bidding to run specific routes. Successful bidders will 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.

Now You Can Get the Latest Buzz On Your Phone! Download the PagalParrot Mobile App For Android and IOS

Next Story

After Child Actor Shivlekh Singh’s Tragic Death, This Actress Also Dies in a Car Accident

Earlier, the new hit and put people in shock when 14 years old child actor Shivlekh Singh lost his life in a...

Share

More From PagalParrot