UDAN Fails To Take-off For Regional Players, 3 Airlines Can Shut Down – Find Out The Reasons
Find out why 3 out 4 regional airlines may shut down, due to lack of Udan's success.
When PM Modi announced India’s first regional connectivity scheme: UDAN or Ude Desh ka Aam Nagrik, then expectations were much higher. We had expected that this new scheme will revolutionize aviation sector, and incite a new wave of progress.
After almost 2 years of this scheme, the harsh reality is slowly, but gradually coming before us: And let the truth be told.
UDAN is proving to be a big failure, at least for the regional airlines, who had gambled everything to make it click.
No doubt airports at Tier 2 and Tier 3 cities have been developed, and now, air connectivity has reached these cities. But at the same time, regional airlines are staring at huge losses.
Infact, three out of four such regional airlines can be shut down.
We try to find out the reasons.
UDAN Fails To Take-Off
Bigger airlines such as Indigo, Jet, Spicejet and Air India have secured some good routes, and they are even making some money via UDAN scheme.
But there are 4 regional airlines, whose existence depended on these regional routes. And they are not able to pick up ticket sales.
4 regional airlines which have started their operations based on UDAN flights are:
Zoom Air; Air Deccan; Air Odisha and TruJet.
Out of these, only TruJet has managed to fly an average of 50,000 passengers per month, which means that they are able to generate decent revenues.
Zoom Air hasn’t flown a single passenger since July, and Air Deccan and Air Odisha are right now handling 3000 and 1000 monthly passengers, as per data by Directorate General of Civil Aviation (DGCA).
Infact, due to such ‘performance’, Airports Authority of India had to cancel three routes: Air Odisha on two routes (Chhattisgarh and Chennai); and Air Deccan’s one route in Maharashtra.
What Are The Reasons For This Poor Performance?
- Scale. As the size of the airplane decreases, the price of per seat increases, even as the cost of maintenance, and staff salary (crew, pilot) remains same. Hence, in order to sustain growth and momentum, regional airlines will be needing lots of passengers, which isn’t happening. Scale is missing, which is leading to losses.
- Success Rate. As of July 2017, success rates of UDAN centric flights was only 12%. While Govt. had allocated 126 routes for various airlines, only 16 routes were operational as on July 2017, which were by SpiceJet, Alliance Air and Trujet.
- Technicalities. Due to various reasons, not every regional airport which have been allocated UDAN flights are yet operational. This means that the regional airlines are not able to even start their operations in some routes. As of May, 2018, none of the helicopter routes were operational, for the same reason.
- Clash. There has been a subtle clash of vision between the Centre and the State here, when it comes to UDAN. Centre is saying that States are not fully cooperating with the operations, promotional programs, and States are claiming that Centre hasn’t allocated appropriate funds. Proper funds allocation under ‘Regional Connectivity Fund’, a special fund for the purpose of UDAN flights have not been optimized, which is leading to further confusion and chaos.
We will keep you updated, as we receive more news about UDAN.
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