Although I am not sure that the need of the hour is really for every aam nagrik to fly, the government’s new Udan (Ude Desh ka Aam Nagrik) scheme to kick-start regional connectivity has its heart in the right place.
It would be ideal if citizens all over the country could fly around instead of taking trains and buses, if destinations that can’t be reached without days of travel can be reached in a couple of hours, if so far unused airports could become functional, if the benefits and rub-offs of making a new airport operational could flow to all stakeholders, but it is to my mind easier said than done.
As I have understood it, the idea is to auction hitherto unexplored routes and destinations and the winner will be the player who quotes the lowest fare and provides the most seats for that route. If you win one route in the bidding process, you can run it for three years without anybody else coming there. The scheme aims to encourage airlines to provide low-cost flying by offering subsidies like viability gap funding (VGF), zero landing charges by airport operators and reduction of excise duty on jet fuel. The government also intends to make it easier for prospective players to lease small aircraft by making the rules less stringent.
But there are a few reasons why I am skeptical of whether the new scheme can fly at all. One, India’s experience with smaller, regional players has been more than unhappy. I don't know whether it's the glamour associated with aviation but for some reason, the sector has tended to attract players for all the wrong reasons.
More often than not, players that have tended to come into the sector have lacked finances, credibility and professionalism. We have seen a string of failures — especially among the smaller players — over the last 20 years — right from ModiLuft, East-West and Damania to MDLR, Paramount, Air Costa, and Air Pegasus to name a few current ones. So to expect a number of or even a few good, solid, credible players to take up the mantle of providing reliable services for these remote destinations is a bit like expecting Rahul Gandhi to suddenly emerge as the powerful, strong leader taking the Congress party forward.
So, can we expect the existing scheduled airlines to try their hand and participate in these auctions — assuming one actually takes place? I spoke to a few of the airline CEOs after the announcement. While most were yet to fully absorb the policy, they argued that the proposal was too “complicated” and that taking their eyes off the competitive domestic scenario to try and comprehend this new creature was not really an option that had occurred to them.
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A second question that arises is on what basis the civil aviation ministry has arrived at Rs 2,500 as the fare cap for a flight of one hour or less. It has said that half the seats on the aircraft will be sold at Rs 2,500 or less. While the details of how this cap will operate and who will finance what remain quite hazy, it strikes me as odd since on almost all routes that are currently of this duration, fares are far lower.
I will illustrate just with one sector: Delhi-Dehradun — for which my family and I have collectively bought over 20 tickets in the last year and for which I am yet to pay Rs 2,500 even once for the 35-40 minute journey. In general, one-way tickets are usually anywhere between Rs 1,500 and Rs 2000 with an exceptionally low fare of Rs 1,200 once! So my question is, why fix any caps when the prevailing market prices are usually lower? You run the danger of the fare cap acting as the de-facto fare (since it has the official stamp of approval). It can also influence pricing on other existing routes to the detriment of passengers.
And last but not the least, the skeptic in me must ask why this government thinks it will be any more successful than any of its predecessors in getting these unused and ghost airports going? I have been writing on aviation since 1995-96. Ever since I started covering the sector, there has been talk by sundry ministers of how these remote airports or airstrips would become operational and of what kind of benefits the area would reap as a result. Suffice to say it simply hasn't happened. In fact even with some major airports we are still hoping to see the light of day. Many others have come and gone. To name a few: Navi Mumbai, Mopa, Greater Noida and Sindhudurg.