The Indian government is inviting airline bids for 392 new regional routes under UDAN-RCS Phase 4.1. This phase will focus on new routes that haven’t been on offer before and previously canceled services that the government wants to see back in action. Demand for UDAN routes has increased over the last year as airlines look for new revenue beyond metro cities and international travel.
For those unfamiliar, UDAN-RCS (Regional Connectivity Scheme) is a government plan which auctions short, regional routes from Tier 2 and 3 cities and offers a host of benefits to make them viable in the first few years.
UDAN-RCS routes connect Tier 2/3 cities to major hub cities and other small destinations to boost connectivity in the country as a whole. The scheme is also behind the opening and modernization of new airports across the country to increase the reach of air travel. This latest round of the scheme will see airlines having the chance to bid for 392 new routes.
Under Phase 4.1, the government is focusing on three distinct types of routes: routes that have been on offer in previous rounds of UDAN but weren’t taken up or canceled, routes requested by individual states, and non-priority routes as laid out by the government. This means airlines will have the chance to compete for routes that may have previously not been a part of UDAN.
One more notable change in this round is that routes over 600kms will be included. However, the Viability Gap Funding (VGF) will not apply beyond 500kms. This means airlines will have to determine if some longer routes make sense with lower government funding.
The latest round of UDAN-RCS comes at a time when demand for regional flights has grown in the last year. SpiceJet, the largest operator of regional routes, has made plans to add dozens of new regional flights under the scheme. IndiGo, the country’s largest airline, has also announced new bases across the country to serve new regional demand.
As international travel remains low, airlines are looking to diversify further into the Indian market and increase the share of the population traveling by air. Moreover, the VGF means that airlines can partially cover costs even if demand is low at first. The government also offers lower taxes and other benefits to airlines participating in UDAN.
Aside from the major carriers, India has a few dedicated regional airlines. The most notable is Air India subsidiary Alliance Air, along with region-specific carriers like Star Air, TruJet, and Flybig.
The government expects to complete the bidding process within six weeks, allowing the routes to come into operation fairly soon. With demand high right now, expect to see many of the 392 routes on offer to find buyers. Regional traffic is key to expand India’s aviation market and continuing its growth in the future.
Have you flown regional routes in India? Which airlines did you fly with? Let us know in the comments!