UDAN 5.0

UDAN 5.0
 

News: The Ministry of Civil Aviation in India has launched the 5th round of the Regional Connectivity Scheme
(RCS) – Ude Desh Ka Aam Nagrik (UDAN) to improve connectivity in remote and regional areas of the country.
About:
 It was launched as a Regional Connectivity Scheme (RCS) under the Ministry of Civil Aviation in 2016, to provide affordable, economically viable and profitable air travel on regional routes to the common man even in small towns.
 It envisages providing connectivity to un-served and underserved airports of the country through the revival of existing airstrips and airports and generate employment in the aviation sector.
 

Important features of the Scheme:
 Under the scheme, airlines have to cap airfares for 50% of the total seats at Rs. 2,500 per hour of flight.
 It will be achieved through A financial stimulus in the form of concessions from Central and State governments and airport operators and Viability Gap Funding (VGF) – A government grant provided to the airlines to bridge the gap between the cost of operations and expected revenue.
 Regional Connectivity Fund (RCF) was created to meet the viability gap funding requirements under the scheme.
 The partner State Governments (other than UTs and NER states where contribution will be 10%) would contribute a 20% share to this fund.
 

About UDAN 5.0: 
 It focuses on Category-2 (20-80 seats) and Category-3 (>80 seats) aircrafts.
 There is no restriction on the distance between the origin and the destination of the flight.
 VGF to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas; earlier capped at 500 km.
 No predetermined routes would be offered; only Network and Individual Route Proposal proposed by airlines will be considered.
 The same route would not be awarded to a single airline more than once, whether in different networks or in the same network.
 Exclusivity of operation provided to an airline will be withdrawn if the average quarterly Passenger Load Factor (PLF) is higher than 75% for four continuous quarters. This has been done to prevent exploitation of the monopoly on a route.
 Airlines would be required to commence operations within 4 months of the award of the route (earlier this deadline was 6 months)
 Novation process for routes from one operator to another has been simplified and incentivized.
 

Novation - The process of substituting an existing contract with a replacement contract, where the contracting
parties reach a consensus.
 

Important achievement of UDAN scheme:
 Increase in connectivity to Tier 2 and Tier 3 cities at affordable rates.
 Operational airports have gone up from 74 in 2014 to 141 now.
 More than 1 crore passengers have availed benefits of the scheme
 68 underserved/unserved destinations which include 58 Airports, 8 Heliports & 2 Water Aerodromes have been connected under UDAN scheme.
 425 new routes. The scheme has taken air connectivity to more than 29 Indian states/UT’s

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