Assam to Bangladesh in Rs 650: Modi govt's new international flight plan

UDAN International puts the onus on state govts to draw up a list of international destinations to be connected to their cities

The Narendra Modi-led central government on August 21 released a draft civil aviation policy called the International Air Connectivity Scheme (IACS) or UDAN International, which has the potential to change how people in different states of India fly outside the country. The scheme aims to provide heavy subsidies to airlines that will be selected to fly people out of various states in India after the states have drawn a list of cities they want connected. In the draft policy, Assam is the only state that has provided a list of international destinations that will be connected to the state capital Guwahati. And Assam is the only state for which the exact amount of subsidies to be provided to airlines eventually bagging the contract have been specified. By the look of it, people who wish to go to Bangladesh from Assam can do so at extremely depressed airfares – cheaper than any other mode of transport that connects the two countries at present.

According to the draft policy, the subsidy for every seat on a flight connecting Guwahati and Bangladesh’s capital Dhaka is Rs 2,370. A look at airfares on third-party booking websites shows that the cheapest air ticket between the capitals of Assam and Bangladesh costs between Rs 3,021 (SpiceJet) and more than Rs 14,000 (full-service airlines like Air India).

If any person in Assam were to take the cheapest SpiceJet flight, the subsidised airfare works out to a paltry Rs 650. This is less than half the bus fare for a travel between Kolkata and Dhaka. The thrice-a-day private Volvo bus service between the West Bengal capital and Dhaka costs more than Rs 1,600 for an early morning start. The subsidised airfares under UDAN International would be even cheaper than travelling by an AC Chair Car or First AC on two passenger trains – Maitree Express and Bandhan Express – that connect Kolkata and Dhaka.  

Similarly, Indigo and Jet Airways flights from Guwahati to Dhaka cost Rs 2,963 and Rs 4,157 a seat, respectively. While all these flights connecting Guwahati and Dhaka have a stopover at Kolkata, UDAN International proposes direct flights between Guwahati and Dhaka.

The airfares between Guwahati and Dhaka offered by these airlines at present are dictated by their stopover at Kolkata, which is an important source of passenger traffic and revenue for all airlines. But if airlines were to operate direct flights between Guwahati and Dhaka under the UDAN International scheme, they could lose lucrative traffic from Kolkata. This could possibly mean that airfares currently being offered by these airlines could be higher for a direct flight.

Even if airlines were to charge 50 per cent more to compensate for the loss of Kolkata passengers, a subsidised ticket for anyone in Assam who wishes to go to Bangladesh could still be quite affordable. If SpiceJet, the cheapest of all airlines, were to increase its prevailing airfares by 50 per cent, a subsidised flight ticket under UDAN International would still work out to be less than Rs 2,000. This could be a big draw for many in Assam who currently have to spend anywhere between five and 11 hours to fly between Guwahati and Dhaka.

A more likely possibility is that many airlines could offer even cheaper fares for a direct flight without a stopover at Kolkata. That’s because a direct flight between Guwahati and Dhaka will have to cover just 360 kilometres. A flight from Guwahati that flies to Kolkata and then to Dhaka has to cover 700 kilometres. This effectively means that airlines can reduce their fuel costs, which constitute the bulk of their operational costs, by almost half.

And, it’s not just Bangladesh. The Assam government has given five other international routes, flying to which would become a lot cheaper for people in Assam whenever the draft UDAN International policy is adopted. These include connecting Guwahati to Kathmandu, Kuala Lumpur, Yangon, Singapore and Bangkok. While travelling to Bangladesh from Assam would still be the cheapest and least time consuming, the other international destinations could also become attractive. A subsidy of Rs 2,710 for every seat has been proposed on a flight connecting Guwahati and Kathmandu.

At prevailing rates for a flight on September 25, the cheapest flight via Kolkata and Delhi under the UDAN International scheme could end up costing Rs 4,400. Similarly, subsidies for every seat on flights from Guwahati to Kuala Lumpur, Yangon, Singapore and Bangkok have been fixed at Rs 7,350, Rs 4,770, Rs 7,880 and Rs 4,400 respectively. This means that the cheapest subsidised flight to Kuala Lumpur from Guwahati could cost almost Rs 1,900. Meanwhile flights to Myanmar’s capital Yangon, which are traditionally expensive, could cost almost Rs 19,000 after accounting for the subsidy. The cheapest subsidised airfares under the draft scheme for Singapore and Bangkok could cost Rs 900 and Rs 1,900, respectively.

The draft policy of UDAN International clearly states the manner in which the subsidy to be provided to international airlines will be calculated and how airlines will be selected for this ambitious programme. Only designated airlines will be allowed to bid for these routes, which will be specified by the states. Every route will have only one airline operating, to keep competition to the minimum and make it viable for the airline to fly on the ‘low demand’ route.

The draft policy states: “The Ministry of Civil Aviation and state governments recognise that traffic demand on IAC Routes will be uncertain, and with most of such routes being untested or non-operational, the market risk for selected airlines could be significant. Such market risk would tend to be accentuated when multiple airlines are supported and encouraged to undertake operations on the same route. During the subsidy-exclusivity period, the Ministry of Civil Aviation or respective state governments shall not provide any Subsidy Support to any other airline for the specific International Air Connectivity (IAC) Route.”

The airline which bid for the lowest number of seats requiring subsidy support would be given the contract to fly on every route. The number of subsidised seats for every flight will be determined by the percentage of subsidised capacity quoted by the airline to the total capacity of the aircraft operated on the route by the airline.

For instance, if the capacity of an aircraft flying between Guwahati and Dhaka is 200 passengers and the percentage of subsidised seats quoted by the airline on this route is 40 per cent, 80 seats on the flight will be eligible for subsidy. The Ministry of Civil Aviation has stated that the minimum capacity of every flight to be operated on IAC routes will be 70 passenger seats. Even though the subsidy will be extended to airlines for three years, they will be allowed to exit the scheme after a year in case their operations turn out to be unviable.

Even though the official draft policy released by the Ministry of Civil Aviation mentions specific subsidies only for Assam, the scheme, if implemented, could trigger demand from many more states to operate such flights from their cities. Although it hasn’t yet been officially stated in the draft, Civil Aviation Minister Suresh Prabhu stated on social media that Andhra Pradesh had requested two flights connecting Vijayawada with Singapore and Dubai.

Even as other states are yet to put forth their demand for routes, there are many potential routes that could benefit people in smaller cities who have to travel to state capitals or big metros to fly to various international destinations. For instance, many international school students in Dehradun could benefit from direct flights to Kathmandu and Bangkok. Sikh pilgrims could benefit from direct flights to Islamabad from Amritsar. Many people in Tamil Nadu could benefit from cheaper direct flights from Madurai and Coimbatore to Colombo, Singapore and some other South East Asian destinations. People in Uttar Pradesh could benefit from direct flights between Kanpur and Gorakhpur to Kathmandu. People in Sikkim could benefit from direct flights between Pakyong to Thimphu and Kathmandu.