Over 2400 crore rupees VGF disbursed under RCS-UDAN, four states get over 50%

Successive governments have looked at ways for subsiding air travel in remote areas but none took off until Regional Connectivity Scheme (RCS) – UDAN (Ude Desh ka Aam Nagrik). As a response to a question asked in Rajya Sabha – the upper house of Indian parliament, the government has released the data about the Viability Gap Funding which has been done under the scheme. 

The government has disbursed VGF of INR 2454.29 crore since the scheme was operationalised. The first flight under RCS-UDAN took off on April 27, 2017 between Delhi and Shimla and was flagged off by Prime Minister Narendra Modi, who has been instrumental in pushing more flights under this scheme.

The scheme has had its share of issues, with airlines operating under the scheme going down early in the cycle along with a lot of routes being non-operational after starting. As of last month 461 routes were operationalised. While the scheme envisioned getting the market ready in three years to operate without subsidy, not many routes have been able to mature to that level. While the criticism is valid since airlines dumped a lot of routes mid-way, there is no denying the fact that the country crossed the 100 operational airports mark because of this scheme. Even today, some of the remotest airports and routes are being connected because of this scheme with airports like Rupasi, Jamshedpur, Jagdalpur, Rourkela or Bilaspur making it on the air map, which otherwise would have been very challenging if not impossible.

Which states got maximum VGF?

Data released by the government shows that Karnataka benefitted the most with a VGF of INR 570 crore, which is 23.2% of total VGF. This was followed by Maharashtra which got VGF of INR 282 crore, Uttar Pradesh (INR 243 crore), Rajasthan (INR 176 crore). These four states together got a VGF of 51.8%. 

Haryana got lowest VGF at INR 0.66 crore, presumably because of limited airports in the state. The VGF would have likely gone for operations from Hisar to Chandigarh which were operated by Air Taxi for a short period of time. Jharkhand, Telangana, Diu, Mizoram, Sikkim were the other states which had less than INR 10 crore being doled out at VGF. 

Why Karnataka?

When the scheme began there were a lot of airports and routes from/to Karnataka which got flights. There was a sudden spurt in flights at Belgavi, Hubli and Mysore while over a period of time Bidar, Kalaburagi (Gulbarga) and Vidyanagar were operationalised.

The state is also expected to get more flights as Shivamogga airport was recently inaugurated while Vijapura and Hasan airports are expected to be ready soon. Bellary, Kolar and Kushalnagara also appear in the list of unserved airports in Karnataka.

Network Thoughts

The real challenge for RCS-UDAN has been to continue operations after the three year exclusivity tenure. After the end of subsidy,few markets have matured enough for operations to continue and it is not the markets alone, airlines too have not been able to make it work except in a few cases and few airlines. What is the overall contribution of the route in the airline network is what matters the most for an airline.

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