However, the government’s flagship programme took a serious hit when Finance Minister Nirmala Sitharaman announced a 60 per cent decrease in funds to Rs 502 crore in February’s interim budget. Another scheme, Krishi UDAN, which was introduced to assist farmers in transporting agricultural produce received no funds.
The reduction in funds came even as the government reiterated that the implementation of air connectivity to tier-two and tier-three cities under the scheme has been extensive.. The country’s new Aviation Minister Ram Mohan Naidu has said that his aim is to make air travel affordable for all.
“With travel returning at pace in India, it has indeed been an exciting period of time for India’s aviation and tourism sectors. To cater to the robust growth in travel volumes, particularly from Tier 2 and Tier 3 cities within the country, 15 airport projects have already been announced across key destinations over the last quarter,” said Sumit Prakash, Country Director, India and South Asia, Collinson International, a company that works with travel and hospitality brands around the world. “This is further complemented by the inauguration of new airports, new terminals being developed at existing airports and the expansion of flight routes,” Prakash added.
Questionable progress?
While the government has continued its effort in boosting regional connectivity, the success of schemes has been questionable. Former Minister of State for the Ministry of Civil Aviation V K Singh had said in a written reply in the Rajya Sabha that out of the 1,300 valid routes under UDAN, 501 were cancelled. The reasons included shutting down of airlines and non-readiness of airports. Only 201 routes have completed the prescribed three year tenure.
Airlines registered with the scheme are provided with benefits from the central and state governments, as well as the Airport Authority of India in the form of tax concessions, airport charges, and viability gap funding, if there is a shortfall of revenue while operating on UDAN routes. However, country’s leading airline Indigo cut short the number of flights under the scheme in the previous year.
“We hope to see increased investment in infrastructure that enhances connectivity and accessibility, especially in emerging travel destinations,” said Shikhar Aggarwal, JMD, BLS International services Ltd.
Pandemic Hit
Like in all other parts of the world, India’s aviation industry was severely affected during the Covid-19 pandemic. With the world shutting down for months, many airlines saw their bottom lines plummet – causing them to ground flights and cancel routes.
However, national air passenger numbers have slowly recovered since then, now crossing the pre-pandemic numbers.
In FY24, airports in Diu, Patnanagar, Agra, and Shillong witnessed a passenger footfall growth of 40-60 per cent, signifying the growing demand for air travel. Tezpur broke all records with an increase of 702 per cent in passenger traffic. It was 4,000 in FY23, and went up to 32,000 in FY24.
“The past few years have underscored the sector’s resilience and adaptability, and we are optimistic about its potential. Yet, we firmly believe that strategic government support is crucial to fully harnessing this potential,” said BLS’ Aggarwal.
A Budget boost for aviation?
The upcoming Union Budget will give an indication of what lies ahead for the government’s flagship UDAN project and India’s aviation sector as a whole.
The government has joined hands with the private sector in order to create better flight and airport operations.
“We need a cohesive approach that would encompass the public and private sector on one hand, and the government (state and central governments, and local authorities) on the other hand, in order to continue developing world class tourism infrastructure,” Aggarwal said.
Another factor on people’s expenditure on travel is tax. With lesser income tax, the common man will have a better disposable income.
“The government should bring in changes such as reduction in income tax and related exemptions which could also benefit the sector to a great extent by creating a favourable environment for people to spend their disposable income on travel,” added Aggarwal. .
The government, in the Union Budget, must also focus on indigenous production of aeroplane parts to reduce duties and lower the cost of aircraft.
“A significant trend in recent budget allocations is the emphasis on modernisation and indigenisation. This development not only promises to elevate passenger experience but also significantly boost tourism and create myriad economic opportunities. We are excited to contribute to this new chapter in India’s aviation story, ensuring seamless travel for all,” said Kapil Bardeja, CEO and Co-Founder, of Vehant Technologies.