Amid low demand for flights, govt explores funding for Udan scheme: Report

The government is evaluating ways to fund its regional connectivity scheme (RCS) amid low demand on the routes.

Some options being explored to raise funds for the Udan scheme include securitisation of ticket levy and decreasing the number of subsidised seats on routes with higher demand, the Business Standard reported.

Currently, only 136 out of 268 Udan routes are operational, due to low demand, the report said. These flights are operated by Alliance Air, IndiGo, SpiceJet, Star Air, and TruJet.

Moneycontrol could not independently verify the story.

"Presently, there is no change in the scheme for collection of RCS levy. The ministry, however, is considering various options and innovative models," the ministry said in response to queries by Business Standard.

Domestic flight operations resumed on May 25 after a gap of two months due to the nationwide lockdown. Airlines are operating less than 30 percent of their RCS flights, though they are allowed to operate 45 percent, the report said.

After domestic flight operations began, airlines were operating 146 RCS routes but cancelled 10 due to low demand, the report added.

Since the RCS was launched in 2017, airlines have been awarded 688 RCS routes, the report said.

The government had in May said it will not pay viability gap funding (VGF) for RCS routes longer than 500 km, and said the decision is applicable for three months.

"Operating long and thin routes is our business plan. We are restricted to fly most of our allotted RCS routes temporarily and hope the ministry revokes this order soon," a Star Air spokesperson told the publication.