India's Civil Aviation Minister Wants To See 1,000 New Air Routes

Feb 07,2021

India's Civil Aviation Minister Wants To See 1,000 New Air Routes

India's Civil Aviation Minister, Hardeep Singh Puri, has said he wants to see 1,000 new air routes in India. The new routes will be a part of the government's growing UDAN-RCS (Regional Connectivity Scheme), connecting underserved towns. The scheme has become popular among airlines as they grow domestic demand.

Huge expansion
Speaking after India's annual budget, Hardeep Singh Puri made the targets of his ministry clear. As seen in Mint,the Civil Aviation Ministry plans to upgrade and offer services to 100 regional airports and add at least 1,000 new routes. By 2025, the government hopes to see another 100 airports being modernized and ready for air services.

The goals will require substantial work to get there. Currently, 56 airports have been modernized and 700 routes have been awarded to airlines. However, only 311 of these routes are operating flights as of today. To reach 1,000 new routes, more airlines will have to participate and new services be awarded soon.

Despite having huge opportunities in the regional market, only three carriers operate regional aircraft: SpiceJet, IndiGo, and Alliance Air (an Air India subsidiary). Without a substantial fleet expansion or new entrants, operating so many routes might be impossible for the existing airlines. Larger aircraft like the Boeing 737 and Airbus A320 do not make sense on several routes due to low demand.

Airlines are interested
As aviation reels from the pandemic, Indian airlines have shown a keen interest in starting routes under UDAN-RCS. The turn towards regional traffic is not surprising as airlines look to offset losses from international flights. All three of the aforementioned carriers have been growing their route maps in the last year.

SpiceJet has been using its fleet of 23 Q400s to start dozens of new routes to its regional destinations. Cities like Jharsuguda, Darbhanga, and Pakyong, have all seen greatly expanded connectivity with SpiceJet. Similarly, Alliance Air will start flights from Bilaspur, Chattisgarh from March 1st, flying to Delhi.

IndiGo has also jumped at the chance to grow its regional operations, adding seven new bases in the first half of 2021. Cities like Agra and Darbhanga will begin to see strong competition as more airlines join the fray. It's clear that regional traffic in India is poised for a major jump.

What's so special?
The reason airlines are expanding services at such a tumultuous is two-fold: government support, and demand. Under UDAN-RCS, the government offers a Viability Gap Funding (VGF) for three years. The VGF provides airlines will direct financial support and various fee concessions, lowering operating costs. This allows connectivity to grow even if traffic is low at first.

The second reason is that airlines want to find new pockets of demand. Only 10% of India's population currently flies and growing that number will need regional expansion. For India to continue growing rapidly, regional connectivity is imperative.