Fund crunch may ground UDAN of government’s pet scheme

The Civil Aviation Ministry may find it difficult to sustain the government’s pet regional connectivity scheme, Ude Desh ka Aam Naagrik (UDAN), if it doesn’t get more funds.

Published: 18th December 2017 07:46 AM  |   Last Updated: 18th December 2017 07:46 AM   |  A+A-

File photo of PM Narendra Modi waving as the first UDAN flight takes off in Shimla

By Express News Service

NEW DELHI: The Civil Aviation Ministry may find it difficult to sustain the government’s pet regional connectivity scheme, Ude Desh ka Aam Naagrik (UDAN), if it doesn’t get more funds. A senior ministry official said a major part of funds meant for the scheme had already been utilised, and with more routes set to become operational under UDAN, the ministry may find it difficult to provide Viability Gap Funding (VGF) to participating airlines.

In April, Prime Minister Narendra Modi flagged off the first flight under UDAN, which was announced to connect unserved and under-served aerodromes as well as make flying more affordable for the common man. As many as 128 routes connecting 70 airports were awarded in the first round of bidding for UDAN.

Under UDAN, participating airlines are extended VGF for three years from the date of commencement of operations, but the ministry fears that the amount available might not be sufficient once more players start operating UDAN flights, sources said. The ministry contributes 80 per cent of the VGF amount, while the remainder comes from the state governments concerned. In the case of the north-eastern states and Union Territories, the sharing ratio is 90:10.

The ministry levies `5,000 per flight towards VGF on key routes, and proceeds from this are estimated to be around `200 crore annually. An official said that so far the ministry had garnered around `70 crore by way of levy for the VGF, adding that by 2018, all the airports in the first round would be operational.
The ministry is looking at ways to overcome financial difficulties and might ask the state governments concerned to cough up more money to meet the VGF requirements or it might seek budgetary support.

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