Attempt to boost connectivity
Airlines are usually categorized as nationwide carrier or regional carrier. The segregation is based on the area served by an airline. While airlines like Air India, Indigo, SpiceJet and more are serving pretty much entire nation, there are few airlines which are restricting their market to a specific region. The objective of these regional carriers ideally is to boost Air connectivity among smaller cities.
Past efforts
There have been few past attempts as well to kick start air connectivity to small cities (tier I and II) by governments both state and central. Vayudoot service was among one of them in 80’s and 90’s where central government started an air service for smaller cities with small aircraft. The Vayudoot service was under losses. Therefore, the government eventually shut it down.
Later, on state level, many states enabled air service by giving subsidies to operators. However, almost all of them got closed due to non-viability or inadequate passenger load. Multiple models have been tried to distribute subsidy. However, nothing worked. Airlines like, Air Pegasus, Air Carnival, Air Costa, Northeast shuttle, Odisha Air, Supreme airlines, Trujet, MDLR are names of some. Usually, Airline business starts with big shout and glamour and shuts down in silence.
Present Scenario
Indian government made an attempt again to increase coverage by adding new airports and offering a scheme known as Regional connectivity scheme (RCS) also known as UDAN (Ude desh ka aam nagrik). The scheme is funded by a Viability Gap fund (VGF). The VGF is filled by putting a cess on regular flights on key sectors. The amount collected as cess is then given a subsidy to operators opting to run flights on RCS routes.
The scheme initially attracted new airlines like Deccan Airways, Odisha air and more to operate short sectors with appropriate aircraft. However, they were not able to sustain their costs with applicable VGF. Big players like Indigo, Air India regional (now known as Alliance Air) or Fly big and more started RCS flights on many sectors with ATR aircraft. Some of the sectors picked up a little due to controlled fare. However, few sectors have been closed due non-viability.
On state level as well, few states are trying to enable local air connectivity in the name of tourism or regional connectivity. In such scenarios states are mostly subsidizing the operations to a large extent to control fare escalation.
Visible Impact
While the impact initially looks media frenzy. There are concerns over long term viability of such flights. Some of the sectors have really picked up with good loads. To create a new sector, consistent operations with right blend of awareness is required. Small private operators usually are not in a position to manage market sensitization along with operations.
Conclusion
There is no doubt about the positive impact of regional connectivity in multiple aspects. The concern remains is financial viability. Indian consumer is generally price sensitive. On new sectors, takers will be there until they do not have to shell out what is realistic fare. Possibly the decision makers can come out with a sustainable solution this time.
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