Page 618 - SSB Interview: The Complete Guide, Second Edition

Key Objectives

To revive the existing under-served and un-served airports/airstrips in
smaller towns and provide them connectivity so that persons in those

towns are able to take affordable flights.

To provide viable and profitable business to operators.

To promote tourism, increase employment and promote balanced

regional growth.

Features

The key features of the UDAN scheme are as follows: RCS is applicable

on route length between 200-800 kilometres with no lower limit set for
hilly, remote, island and security sensitive regions.

The business model of the scheme is based on Government subsidy and
viability gap funding (VGF). The Central Government will provide

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concessions of around 2% excise on VAT and service tax at 1/10 rate
along with liberal code-sharing for regional connectivity airports.

The airlines are required to commit around 50% of the seats as RCS

seats on RCS flights.

The funds for this scheme would come from a Regional Connectivity
Fund (RCF) created by levying certain charges on certain flights. States

will need to contribute around 20% to this fund.

For balanced regional growth, the allocations will be spread equitably

across five regions in the country, viz. North, South, East, West and
Northeast.

Strategy