UDAN 3.1: Civil aviation ministry invites bids for 30 networks, withdraws exclusivity clause

UDAN 3.1: Civil aviation ministry invites bids for 30 networks, withdraws exclusivity clause
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New Delhi, Feb 12: The civil aviation ministry has invited bids from airlines to fly over as many as 28 to 30 route networks in a bid to cover north eastern region, hilly terrain of Uttarakhand, Jammu and Himachal as well as intra-island connectivity at Andaman and Lakshadweep.
Bids have been invited for routes such as Guwahati-Tezpur, Guwahati-Passighat, Port Blair-Hutbay/Havelock/Neil Island, Raipur-Bilaspur, Patna-Hazaribagh, Hazaribagh-Kolkata, Hissar-Chandigarh, Hissar-Jammu, Kargil- Leh/ Jammu, Srinagar-Thoise and Rewa-Jhansi/Bhopal among many other routes. For the first time, Centre has also bid out routes for Lakshadweep islands including Agatti-Mincoy and Agatti-Kavaratti.
UDAN, short for Ude Desh ka Aam Nagrik, is a government sponsored scheme to connect tier-II and tier-III cities with tier-I or metro cities. The scheme aims to make air travel affordable for economically weaker citizens by capping fares, for every one hour flight, at Rs 2,500.
The government has invited bids till February 22, 2019 after which it shall award the routes to airlines on February 27, 2019. It has set a deadline of six months for the airlines to commence operations on such routes from the date of award to the airline.
Centre has, however, asked the airlines to do their own due diligence for infrastructure readiness.
“Applicants are encouraged to submit their respective proposals after ascertaining for themselves the site conditions, condition of the regional connectivity scheme (RCS) airports / water aerodromes, feasibility of the proposed RCS routes, traffic, location, surroundings, climate, availability of power, water and other utilities / space for temporary construction (if any required), access to site, handling and storage of materials, weather data, applicable laws and regulations, and any other matter considered relevant by them,” the notice inviting proposals said.
Centre, on January 25, released 235 routes that were awarded under third phase of the scheme. Certain routes, however, were yet to be finalised in consultation with state governments and were withheld by the ministry
Exceptions under UDAN 3.1
The government, however, has withdrawn certain benefits for airlines opting to fly on routes under UDAN 3.1.
According to the notice, airlines opting to bid for these new routes shall not receive any “exclusivity of operation” right as is given to airlines under previous UDAN routes coupled with any additional concession apart from funds through viable gap funding.
The scheme, launched in 2016-17, is funded by the government through a Viability Gap Fund, where the government reimburses the airlines for subsidised pricing.
Additional concessions offered by the government include excise duty will be levied at the rate of two percent on Aviation Turbine Fuel (ATF) drawn by selected airline operators at RCS airports for such flights for a period of three years, selected airline will have the freedom to enter into code sharing arrangements with domestic as well as international airlines in accordance with applicable regulations and prevailing air service agreements and concession on service tax on tickets among other things.
As per rules, airlines flying under UDAN scheme get three year exclusivity period, giving them exclusive right to fly over such routes.
“During such exclusivity period, no other airline operator would be allowed to operate flights on the specific RCS route. In case of a network proposal, exclusivity of operations shall only be provided on RCS routes as part of the network,” the rules say.
Ministry of civil aviation has already awarded 128 routes under the first phase of UDAN and 312 routes under the second phase. Of these, 76 routes are operational under the former and 60 are operational under the latter.