Flying for Everyone!
India Strategic|November 2016

INDIA’S COMMERCIAL aviation industry is currently enjoying a period of vigorous and sustained growth. According to official statistics, domestic traffic grew 23.17 per cent during the first nine months of 2016 – by far the fastest rate in the world. And the party seems set to continue. The International Air Transport Association (IATA) forecasts that by 2026 India will be the third largest aviation market globally, behind the United States and China.

Joseph Noronha

Yet the industry has long suffered from a major shortcoming – its abysmal failure to take aviation services to the remote regions of this vast country. According to Airports Authority of India (AAI) sources, the top 45 Indian airports handle over 90 per cent of domestic passenger traffic, leaving just 10 per cent for the rest.

A number of attempts to set up airlines specifically to cater to un-served and underserved destinations have floundered, for one reason or another. Over the last few years, stand-alone regional carriers like MDLR Airlines and Air Mantra started small, stayed small, and sank without a trace. Indeed, an inability to grow the fleet is an obvious sign of distress.

SMALL CARRIERS, BIG WOES

The latest troubled regional airline is Bengaluru-based Air Pegasus. It commenced operations in April 2015 with a fleet of three ATR 72-500 turboprop aircraft but suddenly ceased operations on July 27, 2016, due to mounting financial woes. Although the carrier is trying to resume operations, its aircraft have been deregistered and there’s no clarity about its future.

Vijayawada-based Air Costa has been operating since October 2013 and has a fleet of three Embraer E-190 regional jets. Hyderabad-based Trujet has three ATR 72-500 aircraft. Both enterprises are not yet firmly established. Air Carnival, the country’s fourth regional airline, launched operations from Coimbatore on July 18, 2016. It has just one ATR 72-500 and recorded the highest cancellation rate of scheduled domestic airlines for September. The national carriers like IndiGo, Air India, Jet Airways and SpiceJet are trying to fill the regional space to some extent but their heart is not fully in it.

AN IDEA WHOSE TIME HAS COME

Against the backdrop of this rather unsatisfactory regional scene, the Indian government recently introduced the Regional Connectivity Scheme (RCS). The contours of the RCS, which is a key part of the National Civil Aviation Policy (NCAP) 2016, were revealed towards the end of October. Also known by the catchy acronym UDAN (Ude Desh ka Aam Nagrik) it has clearly been prepared after extensive stakeholder consultation. It hopes to attract travellers by limiting the fare for a one-hour flight of approximately 500 km on a fixed wing aircraft (or a 30-minute journey on a helicopter) to Rs 2,500 per passenger. The pricing will vary proportionately for routes of different flight durations. If it works, it will generate economically viable flights on regional routes and will make flying affordable even for passengers from the small cities and towns that so far have been left off the aviation map. UDAN helicopter services too will significantly reduce travel timings in remote and hilly regions and island territories.

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