Data: Under UDAN Scheme, Alliance Air Received More than 60% VGF While Indigo & Alliance Air Ran More than 50% flights
Sai Krishna Muthyanolla
June 8, 2023
Data from the Ministry of Civil Aviation indicates that more than 2.2 lakh flights plied under the UDAN scheme since inception. Indigo & Alliance Air accounted for more than 50% of the flights under the scheme while 60% of the VGF went to Alliance Air.
To improve air connectivity to underserved areas in the country, the Ministry of Civil Aviation (MoCA) came up with the ‘Ude Desk ka Aam Naagrik’ scheme, which is popularly known by its acronym, UDAN, as a regional airport development and Regional Connectivity Scheme (RCS). Apart from improving connectivity, the objectives of the scheme include making air travel more affordable and operations and connectivity sustainable.
Launched in 2016, after the completion of four rounds, the Ministry recently launched UDAN 5.1 to further enhance the connectivity to remote areas of the country and achieve last-mile connectivity through helicopters, in the fifth round of implementation of the scheme. While the latest round is exclusively designed for helicopter routes, the Ministry claims that under the scheme, passengers have received the benefit of air connectivity, airlines have received concessions for operating regional routes, and unserved regions have received the direct and indirect benefits of air connectivity for their economic development.
In this story, we look at the figures pertaining to the number of flights operating under the scheme and the Viability Gap Fund (VGF) released to various airline operators. The data for this story on UDAN flights across different routes, airline companies operating them, and the VGF released has been taken from Dataful, a product of Factly.
Up to March 2023, 2.24 lakh flights ran under UDAN connecting over 100 cities
According to the data provided by MoCA in response to an application under RTI, a total of 2,24,605 flights were operational across 404 routes or sectors connecting more than 100 cities, under the UDAN scheme as of March 2023. These were operated by 13 airlines. Taking into consideration the total number of flights operating across each sector, the top 10 routes with the greatest number of flights are in the table below.
Top routes under the scheme connected a city in Karnataka or Hyderabad or Kolkata
More than 2,500 flights each flew to and fro between Belagavi (Karnataka) and Hyderabad (Telangana). Between Kolkata (West Bengal) and Jharsuguda (Odisha), more than 2,100 flights each plied to and fro while more than 2,000 flights each plied to and fro between Bengaluru (Karnataka) and Kalaburagi (also in Karnataka). A total of 20,740 UDAN flights flew in the ten routes listed above, which is about 9% of the total UDAN flights. It can also be seen that six out of the ten routes connect at least one city in Karnataka. Six routes connect Hyderabad to another city.
The following chart depicts the total number of passengers that have travelled across each of the routes since the operationalization of the UDAN scheme.
As per the passenger traffic data, in the sectors of Mysuru – Hyderabad, Hyderabad – Mysuru, and Bengaluru – Kalaburagi, the number of passengers has increased consistently over the years since operationalization. Meanwhile, in the sector, Bengaluru – Kalaburagi, a marginal drop in passenger traffic was witnessed in 2022 as compared to 2021. In the sectors Hyderabad – Kolhapur and Kolhapur – Hyderabad, the passenger traffic saw a sudden jump to around 26,000 passengers in 2019 from about 600 passengers in 2018. However, in 2020, both routes witnessed a drop on account of COVID-19 restrictions. Since then, there has been a gradual rise in the number of passengers using both routes, exceeding 2019 levels.
In the remaining four routes, Belagavi – Hyderabad, Hyderabad – Belagavi, Kolkata – Jharsuguda, and Jharsuguda – Kolkata, the number of passengers was on a continuous rise until 2021, which fell considerably by 30% to 40% in 2022. However, compared to the first two years of operationalization, the number of passengers in these sectors is greater despite the drop in 2021.
Going by the traffic data available for each of these routes as of March/April 2023, the number of passengers is estimated to increase in most of these routes even in 2023.
50% of the flights were that of Indigo and Alliance Air
The data on the airline-wise total number of flights under the UDAN scheme reveals that the majority of the flights, about 58,000 of the total 2.24 lakh flights were of IndiGo, which is nearly 26% of the total flights. Alliance Air had the second highest number of flights, accounting for 24% followed by Spicejet with 23.5%. Trujet accounted for 13% while Godhawat Aviation accounted for 6%. Altogether, the five airlines contributed to 93% of the flights. The remaining 8 airlines together had only around 16,000 flights, accounting for 7%.
Alliance Air received over 60% of the VGF released in last five years
A total of Rs. 5,678 crores have been released as a ‘Viability Gap Fund’ or VGF between 2017-18 and 2022-23, under the UDAN scheme. Under the demand-driven scheme, the Aviation Ministry provides monetary assistance to the airline operator to enable them to successfully run the routes. The support is determined by the market, through a competitive bidding mechanism where the airline operators bid for the route in the form of VGF per seat. The VGF per seat is capped. VGF per seat is also indexed to changes in CPI-IW, US-INR exchange rate, and ATF prices. That is, the VGF per seat takes into account the said economic indicators.
Under the scheme, data indicates that Alliance Air has received the highest share of VGF in the last five years. About 60% of the total amount released or Rs. 3502 crores went to Alliance Air which has the second-highest share of flights flying under the scheme. A total of Rs. 638 crores was released for IndiGo and SpiceJet was released for Rs. 513 crores. In the last two years, the VGF released for IndiGo was higher than that for Alliance Air. Less than Rs. 100 crores were released to Pawan Hans, Zexus Air Service (Zoom Air), Heritage Aviation, and Deccan Charters (Deccan Air). It should be noted that Pawan Hans is a Central Public Sector Enterprise
Slow progress in the implementation of the scheme was flagged by a parliamentary standing committee in 2021
Data indicates that more people are travelling by airplanes than ever before, due to increased connectivity and affordability as envisioned in the scheme. However, other factors such as improved income, changes in people’s choices, etc. could have also played a role. Earlier, studies highlighted how the implementation of the scheme varied across regions. It revealed an imbalance between the eastern, northeastern and central regions of India when compared with other regions. Previously, a parliamentary standing committee had flagged the slow progress in the implementation of the RCS-UDAN scheme, observing a shortfall of more than 50% of the target in the operationalization of the scheme.
Featured Image: Air Travel