The Union Government launched a high-profile regional air connectivity scheme with lofty goals, accompanied by predictable fanfare and publicity blitzkrieg. The Ude Desh ka Aam Nagrik scheme, known by its cool acronym UDAN, ran into patches of turbulence and returned to the hangar for a revamp. The government has now come up with a Modified UDAN and is prepared to shell out Rs 28,840 crore to be spent over a decade. It plans to develop 100 airports from unserved airstrips and 200 modern helipads, besides focusing on market development and lending support for the operation and maintenance of aerodromes.
UDAN 1.0 faced serious setbacks due to a lack of demand and the resulting adverse impact on viability. Though the scheme expanded the airport network from double digits to triple digits, at least 22 airports became “non-operational”. Some of these were in east and north-eastern states like West Bengal, Arunachal Pradesh, Meghalaya, Mizoram, and Tripura, as these airports were supposed to improve connectivity to remote and underserved areas. According to the government, 15 airports became non-operational under the UDAN scheme due to factors such as the end of the three-year Viability Gap Funding (VGF) support period, poor visibility conditions, daytime runway restrictions at VFR-only airports, shortage of aircraft, leasing issues, temporary discontinuation by airlines, novation of routes, and low passenger load factors.
It is painfully obvious that the scheme was not well thought through and not backed by reliable studies relating to demand from the catchment area. Critics of the scheme argue that this could happen only when narrow political interests overshadow commercial rationale. For instance, over a dozen unutilised or underutilised airports were concentrated in Gujarat and Punjab, where people would not hop on to an aeroplane to go to places that could be reached in the same or lesser time by road.
A more serious issue, and a flaw in reasoning, was that the UDAN airports were originally intended to serve backward areas, but the people living in these regions were themselves economically constrained and could not afford air tickets. Secondly, by the government’s own admission, there were issues relating to visibility because these bare-bones, minimalist airports lacked night navigation systems.
The government could pump money into developing greenfield airports or merely upgrade airstrips into basic airports. As long as it provided funding in the form of VGF, airlines operated flights even when demand was inadequate. Once funding stopped, airlines discontinued services due to low passenger load factors.
However, on paper, UDAN 1.0 was claimed to be a success. During the first nine years of UDAN, 663 routes have been operationalised across 95 airports, heliports and water aerodromes. It operated over 3.41 lakh flights, catering to over 162.47 lakh passengers. It reportedly gave a boost to tourism and improved healthcare access and emergency services. Now the government plans to build UDAN 2.0 on this dodgy foundation.
The government will subsidise airlines for five more years through VGF so that they are able to build a self-sustaining market. That is an artificial way of keeping it going. The real challenge is demand generation, and this can only be achieved by accelerating economic development in the catchment areas. Without that, the revamped UDAN will not be off to a flying start.