Ministry may face fund crunch for UDAN

Ministry may face fund crunch for UDAN

With more routes set to be operational under UDAN, the Civil Aviation Ministry is likely to face a paucity of funds in providing viability gap funding to participating airlines, according to a senior official.

To connect unserved and under-served aerodromes, as well as make flying more affordable, the ministry has launched UDAN, and as many as 128 routes connecting 70 airports were awarded in the first round of bidding.

A total of 141 initial proposals have been received from various players in the second round of bidding, the results of which are expected to be announced this month.

As participating airlines are extended Viability Gap Funding (VGF), the ministry feels that amount that will be available towards it might not be sufficient once more players start operating UDAN flights.

The ministry contributes 80% of the VGF amount, while the remaining comes from the state governments concerned and in the case of North Eastern states and Union Territories, the sharing ratio is 90:10.

A senior ministry official said funds available for providing VGF might not be enough as more routes become operational under UDAN.

Towards VGF, the ministry is levying Rs 5,000 per flight on key routes and proceeds from this route is estimated to be around Rs 200 crore annually. So far, the ministry has garnered around Rs 70 crore by way of levy for the VGF.

In the coming year, all the airports in the first round would be operational.

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