“I want to see people who wear hawai chappal in a hawai jahaz.” – Prime Minister Narendra Modi
On 21 October 2016, the Prime Minister said this while inaugurating one of the Union Government’s dream projects – affordable regional air connectivity from one part of the country to another. Or the Regional Connectivity Scheme – Ude Desh ka Aam Nagrik (UDAN) scheme.
Unlike the two dozen or so other forgettable acronyms created since 2014, I like the name UDAN. But let’s examine whether it has really taken off or been grounded in the last few years. Are those citizens who can only afford hawai chappals, really being transported from Point Mo to Point Di in a hawai jahaz!
A report by the Airport Council International, an organization of airport authorities, depicted that India witnessed the highest rise in airfare in the Asia-Pacific Region post the pandemic. The rise was nearly 41% of the prices on these tickets.
The recent filing of bankruptcy by a major private operator has not helped the sector in any way. It has caused an upward pressure on prices due to increased demand, and left the market at the mercy of the remaining operators. It is not a stretch to say that the aviation sector is a budding duopoly benefitting plutocrats, ignoring hawai chappals.
The Government still needs to adopt the recommendations made recently by the Parliamentary Standing Committee on Transport, Tourism and Culture. To date, airfares are determined based on the Aircraft Rules of 1937, which implies that airlines can fix the prices based on the tariffs keeping reasonable profits in mind. However, by not defining ‘reasonable’, the Government has enabled airlines to squeeze travelers when it comes to pricing. The completely hands-off approach to regulate prices in the sector has helped private operators to often overcharge customers. Some airlines have even introduced additional charges, such as fuel charges, to compensate for higher prices of Aviation Turbine Fuel (ATF), which accounts for approximately 40% of operating costs.
Adding to this, many of the Union Government’s decisions under the UDAN-3 are of serious concern. Of the 774 routes awarded under the scheme, 403 routes (52%) could not initiate operations. Of the 371 routes that did start operations, only 112 (30%) could complete the three year concession period. Of these 112 routes only 54 (48%) routes could operate beyond three years. This means, only 7% of the initially awarded projects were operational as of March 2023. Questions will be asked on the methodology to award these projects.
The report of Comptroller and Auditor General’s (CAG) on UDAN has been scathing. The CAG notes that even after five years, accounting transaction practices in line with prescribed guidelines have still not been established. No rules have been framed by the Ministry of Civil Aviation for collection of payments under the Regional Air Connectivity Fund (RACF) – a corpus fund created especially for airline operations and revenue under UDAN. There is another shocker. The Regional Air Connectivity Fund Trust’s accounts were not submitted to the CAG for auditing (The officers who came up with the CAG Report will be rewarded for their sterling work. A punishment posting may be on its way!).
Multiple aviation experts this columnist spoke to observed that while the National Civil Aviation Policy of 2016 was touted as a pro-citizen intervention, it was really a ploy by the Union government to hand-over India’s national carrier to a chosen bidder. The policy diluted what is commonly referred to as Rule 5/20 which mandates five years of domestic operations before operators were allowed to fly internationally. UDAN short-circuited this requirement. As a result of this, by utilizing 20% of the airline’s total aircraft capacity, any airline can conduct international operations. In one fell swoop, the government has removed all checks and balances which were needed for private players to ply on more profitable international routes. The Maharaja is dead. Long live the self-proclaimed king.
P.S. As I write this column, news coming in of the cabin crew of Indigo making in-flight announcements eulogizing the Prime Minister. Does the Model Code of Conduct not apply 30,000 feet in the air?
[This article was also published on NDTV.com | Friday, November 3, 2023]