Regional routes to power Indian carriers' growth push post-pandemic

As the summer schedule gets rolled out, regional routes are the new growth area for domestic carriers. This is evident in the launch of several new flights to airports in Tier-II, III cities like Pantnagar and Gorakhpur by leading market players.

In 2016, the government had launched the Regional Connectivity Scheme (RCS)-Ude Desh Ka Aam Nagrik (UDAN) to enhance air connectivity to both unserved and underserved airports across the country.

"Selected Airline Operators (SAOs) have operationalised 415 RCS routes under the scheme as on date (March 27), involving 66 airports including two water aerodromes and eight helipads," Minister of State (MoS) for Civil Aviation General Vijay Kumar Singh informed Rajya Sabha in a written reply on Thursday.

UDAN is a market-driven scheme requiring interested airlines to submit bids for flights based on their assessment of demand on particular routes. As the implementing agency for the scheme, the Airports Authority of India (AAI) has awarded 948 valid routes across India involving 154 RCS airports, including 14 water aerodromes and 36 helipads.

The total receipt in the Regional Air Connectivity Fund Trust (RACFT) was Rs 2,458.95 crore and viability gap funding (VGF) disbursed to selected airlines under UDAN was Rs 1,784.39 crore, the minister added in his response.

Among scheduled airlines, IndiGo and SpiceJet are already among the country's largest regional players with 72 flights each under the UDAN scheme.

"There is a huge regional demand which will be the driver for aviation sector's recovery post-pandemic. The aviation industry needs reinforcement, and we are happy with the kind of (policy) initiatives that are being taken," Ronojoy Dutta, CEO of the country's largest carrier IndiGo, told Business Today recently.

"Providing air connectivity to the smaller towns of India has always been a top priority for SpiceJet and we will continue to prioritise and add more UDAN destinations taking air travel to the smaller towns and cities, which has been our constant endeavour," a SpiceJet spokesperson said.

Regional airlines make presence felt

Small regional carriers have also started making their presence felt on such routes. Indore-headquartered FlyBig currently serves 15 destinations in Tier-II cities in West, Central, South and North-East India with ATR 72-500 turboprop aircraft. "There is a tremendous shift happening in passenger profile, with a lot of middle-and-working-class people taking flights due to the time factor, affordable UDAN fares and Covid-19, where a lot of people wish to avoid other modes of public transport," said FlyBig Managing Director Sanjay Mandavia.
 
Upcoming regional carrier IndiaOne Air, with headquarters in Ahmedabad, will launch operations in a few weeks from Odisha with a fleet of 9-seater Cessna Grand Caravan EX. "Currently 15 per cent of aircraft operated by all airlines are regional aircraft (100). In the next two decades, this count is expected to increase by five times," declared the airline's CEO Arun Singh.

Growth in Tier-II, III cities has already started to outperform that in Tier 1 cities. In April 2015, on an average 99,600 passengers travelled exclusively between Tier 1 cities. Traffic involving at least one leg with Tier-II or III city was 1,18,300, daily. In December 2021, this grew to 1.09 lakh and 2.51 lakh, at a CAGR of 1.9 per cent and 12.5 per cent, respectively.

Also read: Airline sector on revival mode, passenger traffic to reach 40 crore by FY24: Scindia

Also read: Indian airline operators expected to add 120 new aircraft per year: Scindia