SpiceJet and Alliance Air were among the five airline companies that won bids to fly to far-flung locations at subsidised rates under the first phase of the government's Udan Regional Connectivity Scheme on Thursday. Others to receive the license included regional airlines Air Deccan, Turbo Megha and Air Odisha.
The government also approved a total of 45 airports that will be a part of the scheme on 128 routes.
The government had received a total of 43 applications from scheduled and non scheduled operators to fly regional routes.
Aviation Minister Ashok Gajapathi Raju, addressing the media, said the total seats on these routes will be around 13 lakh. He added that the scheme will become active in the next 4-6 months.
Under Udan (Ude Desh ka Aam Nagrik) scheme, airlines will receive a viability gap funding in which 80 percent of the subsidy will be provided by the state government and the remaining by the Centre.
Raju said for instance, that 50 percent of the seats under the RCS for a one hour flight will be available under Rs 2,500.
Analysts feel that SpiceJet's fleet, with 17 Q400s which are 78 seaters, are perfect for all RCS routes. Although the RCS was already priced in and the stock has rallied a lot. So analysts feel the stock may not rally on this development one.
While AAI airports in regional locations are ready to take the extra traffic, the airports run by State governments will still need some more work. The Cabinet had on March 5 agreed to pump in Rs 4,500 crore to revive 50 underserved airports.
Many states are planning to cut aviation turbine fuel tax to 1 percent for flights that originate from their airports. Delhi and Goa have already cut ATF tax.
In the financial years 2018 and 2019, plans are to revive 15 airports each, with 20 airports slated to be reworked in FY20.
The second phase of the RCS is expected to begin in six months.
Here is the complete list of the airports that will be a part of the scheme.
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