Air traffic under UDAN remains low in Q1 despite bumper sales: Sources

The mediocre air traffic numbers of the RCS-UDAN scheme also come at a time when the government has doubled the funding under the scheme in the Budget for 2023-24. Representational picture

The Central government's ambitious regional connectivity scheme (RCS), Ude Desh Ka Aam Nagrik (UDAN), has failed to catch the eye of travellers during the first quarter of the financial year 2023-24 (Q1FY24), the busiest travel period in India’s aviation history.

Around 5.5 lakh passengers took to the air under the RCS-UDAN scheme during April-June 2023-24. During this time, domestic carriers in the country carried around 3.86 crore passengers, as per government data seen by Moneycontrol.

The number of fliers in the UDAN scheme in Q1FY24 was marginally higher than the 5.2 lakh passengers in the corresponding period of the previous year.

The slight rise in air passenger traffic comes at a time when domestic aviation witnessed an 18.6 percent year-on-year (YoY) rise in air passenger traffic and a 9.6 percent rise from the pre-pandemic Q1FY20.

For the 12 months ending March 2022, air traffic under the UDAN scheme rose to nearly 33 lakh fliers, on the back of pent-up demand for travel after multiple lockdowns.

However, the number fell to 20 lakh fliers in the first 10 months of 2022-23. An Airports Authority of India (AAI) official told Moneycontrol that around 24 lakh fliers took to the air in the RCS-UDAN scheme in 2022-23.

"Flights operated under the UDAN scheme have fallen by nearly 25 percent in the last year, as private airlines are deploying their capacity on more profitable routes," a senior official of the AAI said.

He added that due to capacity constraints following the grounding of planes of both SpiceJet and Star Air, flights under the RCS UDAN scheme took a beating in the last year.

Another official from the AAI said that the stoppage of flights under the RCS-UDAN scheme by SpiceJet and IndiGo in the past year led to a fall in passenger traffic.

"SpiceJet has reduced the maximum number of flights under the UDAN scheme. The airline now flies on 25 of its awarded 90 routes under the UDAN scheme," the second official said.

He added that IndiGo also operates flights on only 40 routes of the 105 awarded to it under the UDAN scheme.

At the current rate of passenger traffic the RCS-UDAN scheme is likely to miss its target of serving 30 lakh passengers in 2023-24, the AAI officials said.

The mediocre air traffic numbers of the RCS-UDAN scheme also come at a time when the government has doubled the funding under the scheme in the Budget for 2023-24.

In the Budget for 2023-24, Finance Minister Nirmala Sitharaman earmarked Rs 1,244.07 crore for the scheme, up from Rs 600.71 crore (BE FY23) and a revised estimate of Rs 1,078.81 crore.

The AAI officials added that the rate of flight cancellations under the RCS-UDAN scheme also continues to be a cause for concern, as nearly 30 percent of all scheduled flights under the scheme are cancelled 12 hours prior to departure.

"FlyBig, Alliance Air, Star Air, and SpiceJet, the biggest operators under the UDAN scheme, have had the highest number of flight cancellations," one of AAI officials said.

He added that customers are now wary of booking UDAN flights as they feel these flights are likely to get cancelled.

Per Directorate General of Civil Aviation (DGCA) data, FlyBig had reported the highest number of cancellations in three of the six months between January and June. Alliance Air reported the highest cancellations in April 2023.

The fall in passenger traffic along with cancellations by the airlines highlights the vulnerability of the routes under the scheme.

The first AAI official added that in the last 18 months, air traffic under UDAN has fallen mainly due to high ticket prices. Prices of tickets have risen almost every month after the fare caps were removed.

“Ticket prices on some UDAN routes have risen by as much as 200 percent compared to 2019,” the official added.

He added that passenger traffic on some routes had dropped by as much as 50 percent compared to 2021-22 due to improved railway connectivity and higher ticket prices.

As per industry estimates, out of 467 routes awarded under the RCS UDAN scheme, only around 265 routes are operational at the moment.

Officials from the Ministry of Civil Aviation (MoCA) and officials from AAI did not provide data on the number of routes currently operational under the UDAN scheme.

State-owned Alliance Air continues to be the only success story of the UDAN scheme.

The airline, with the most operational flights under the RCS-UDAN scheme, flew 4.71 lakh passengers in Q1FY24, which was nearly 29 percent higher on-year.

"Alliance Air operates on around 65 routes under the RCS-UDAN scheme," the second AAI official added.

The former subsidiary of Air India had flown 3.66 lakh passengers in Q1FY23.

Earlier this year, a Parliamentary Standing Committee took note of the dwindling numbers under the RCS-UDAN scheme and has sought an explanation from MoCA.

It also noted that as per the Output Outcome Monitoring Framework for 2022-23 (till December 31, 2022), the Ministry has not been able to achieve the targets in most cases, with achievements in the range of 40 percent to 67 percent only.

"The Committee notes the low performance of the Ministry on almost all the constituents of the RCS-UDAN Scheme, except one. The Committee hopes that with the increased allocation, the Ministry would do meticulous planning to ensure full utilisation of funds and achievement of targets," the Committee had said in its report.

UDAN, a regional airport development program under the Centre’s regional connectivity scheme, is aimed at refurbishing under-served airports to make air travel affordable.

The scheme was initiated on 21 October 2016 with the objective to fulfil the aspirations of people, with enhanced aviation infrastructure and air connectivity in tier II and tier III cities.

As on February 9, 2023, after four rounds of bidding under UDAN, 467 routes have commenced, operationalising 70 airports, including two water aerodromes and nine heliports.

The UDAN scheme is applicable for a period of 10 years from the date of its notification. The central government has set a target of operationalising 1,000 UDAN routes and reviving/developing 100 unserved and underserved airports/heliports/water aerodromes by 2024.