Out of the 948 routes awarded within the last five years, only 403 routes connecting 65 unserved and underserved airports are operational as of December 2021. So much for prime flying. Glaringly, only 22 routes out of the 94 total routes survived after the three-year subsidy period under the UDAN scheme.
The UDAN scheme was flagged off with much fanfare in October 2016 but has floundered. Since then, 154 RCS unconnected airports – including 14 aerodromes and 36 heliports – are identified for the operation of flights. Out of those, currently, only 65 have resumed flights.
The catch here is that these 403 routes are facing challenges of their own. The pandemic has made the going tougher. Out of those 403 routes, a whopping majority of 300 routes are affected thanks to poor demand. The civil aviation ministry, consequently, has stepped up and decided to increase the advantages under the scheme by a year for those routes which were certain to complete their tenure by December 2021.
UDAN’s failure draws largely from the fact that it’s a market-driven scheme which makes it obligatory for the govt to form routes way more lucrative for airline operators. Bids under UDAN are submitted to support the demand assessment by the airline operator for that exact route or route.
The prospective take-off for the scheme was also scuttled because the second wave left a brutal impact on the economy, especially the tourism and transportation sector. Even after four years of the launch of the scheme, only 47% of the routes and 39% of the unserved and underserved airports were operational by July. the scheme seemed on the verge of finally launching into a full flight because the number of latest operational routes grew to 102 and 120 respectively. However, by FY21, the overall number of latest operational routes had declined to 79, indicating that recovery is much from certain.
The civil aviation ministry has also conceded to the parliamentary panel that the aviation industry could be a difficult ecosystem to be in considering the low yields and high operating costs. true is further exacerbated by delays in obtaining commuter operator permits by new airline entrants, non-availability of suitable aircraft, aircraft leasing issues, the long time interval for delivery, and thorny maintenance problems with small aircraft likewise as bothersome problems in procuring spares from abroad.
Accompanying the dismal performance of the UDAN scheme are the sinking fortunes of the aviation industry. After having a good swathe of its endeavour destroyed by the pandemic, the aviation industry has had to battle with soaring rock oil prices.
“While some airlines have sufficient liquidity and/or support from a powerful parentage, which can help them sustain over the near term, there are other airlines, which are already in financial stress. Furthermore, even for the previous, credit metrics and liquidity profile have deteriorated. Until the cash inflows improve, the airlines would force funding support to satisfy their expenses”
An India Rating report on the aviation industry states that airlines had partially recovered in 2020 but cautioned that raising funds is going to be a challenge going ahead. It states, “Despite challenging operating conditions, airlines have responded run over the last year, aggressively cutting costs and arranging for funding gaps. Barring the leading domestic airline carrier, which boasts a powerful record, other players are in urgent need of record repair. However, recurring covid waves and a smaller market share than the market leader could be key constraints to raising money.”
But it just isn’t the widespread misery within the aviation sector that has contributed to the UDAN scheme tanking badly. Protracted regulatory clearances, paucity of funding, lack of land tracks with clear titles have all varyingly contributed to the scheme’s failure.
“The slow progress of UDAN implementation is as a result of delayed up-gradation of infrastructure and readiness of airports, lack of adequate right of way (including insufficient runway lengths) at a number of the RCS airports, and delays in securing necessary regulatory approvals. Low demand on few routes awarded, adverse and unpredictable weather cause inconsistent operations and have also resulted within the closure of operations by some airlines in an exceedingly few cases.”