UDAN may extend its wings to Southeast Asian destinations

•  Residents of India’s northeastern states will soon be able to enjoy cheaper air fares to destinations in Southeast Asia.
• A draft policy extends the subsidised air travel programme Ude Desh ke Aam Naagrik (UDAN) to international circuits, with state governments funding and identifying the routes for operation.
• The objective of the UDAN (International) scheme is to enhance international air connectivity between Indian states and select international destinations through the provision of financial support to airlines. It is the next step after the positive domestic impact of UDAN.

About UDAN:

• The UDAN scheme is applicable on flights which cover between 200 km and 800 km with no lower limit set for hilly, remote, islands and regions which are security sensitive.
• Under the UDAN scheme, the flights are bound to connect at least one RCS airport (underserved and unserved airports).
• The RCS caps fares and also offers a ceiling for the VGF(Viability Gap Funding) available for each route. Which means the airlines cannot charge beyond the caps specified from passengers.
• For the shortest route under the scheme fare has been capped at Rs 1,420. For longest route, fare has been capped ar Rs 3,500.
• The Centre has also decided to provide concessions such as 2% excise on Value Added Tax (VAT) and service tax at 1/10th.
• State government are bound to provide free security and fire service, utilities at concessional rates and reduce VAT on ATF to 1%.
• There will be no landing charges, parking charges and Terminal Navigation Landing Charges will be imposed for RCS flights.
• A Regional Connectivity Fund (RCF) will be created to fund the scheme via a levy on certain flights. States are expected to contribute 20 per cent to the fund.

By: Vishal