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• The Centre said 73 underserved and unserved airports and helipads would be connected under the phase 2 of the regional connectivity scheme UDAN. 

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• The scheme will provide around 26.5 lakh seats per annum that will be covered with [an] airfare cap of Rs 2,500/hr of flying,” said the Ministry of civil aviation.
• In addition, around two lakh RCS (regional connectivity scheme) seats per annum are expected to be provided through helicopter operation.
• The States with maximum number of airports and helipads which will see activation under UDAN 2 scheme include Uttarakhand (15), Uttar Pradesh (9), Arunachal Pradesh (8), Himachal Pradesh (6), Assam (5) and Manipur (5). 
• Some of the cities that would now be connected include Kargil, Darbhanga, Kasauli, Bokaro, Dumka, Hubli, Kannur and Pakyong, among others.
• This was the first time bids were received from helicopter operators under the scheme.

Viability gap funding

• These proposals would required a viability gap funding (VGF) of Rs 487 crore per annum for fixed wing operations and Rs 130 crore per annum for helicopter operations in the priority areas — which include the northeastern and hill States, taking the total funding need for the scheme in phase 2 to Rs 617 crore.
• The Centre said it had decided not to increase the Rs 5,000 regional air connectivity levy charged from airlines flying on major routes to fund the UDAN scheme. It would now be partly funded by the dividend that AAI (Airports Authority of India) paid to the Government of India.

UDAN scheme

• The UDAN Scheme aims at providing connectivity to un-served and under-served airports of the country through revival of existing airstrips and airport.

• The regional connectivity scheme will be applicable on route length between 200 to 800 km with no lower limit set for hilly, remote, island and security sensitive regions.
• The scheme will provide  an airfare cap of Rs 2,500/hr of flying.
• The Central government will provide concessions to the tune of 2 per cent excise on Value Added Tax (VAT) and service tax at 1/10th the rate and liberal code sharing for regional connectivity scheme airports.
• A Regional Connectivity Fund (RCF) will be created to fund the scheme via a levy on certain flights. States are expected to contribute 20 per cent to the fund.
• For balanced regional growth, allocations will be spread equitably across 5 regions - North, West, South, East and North East with a cap of 25 percent.
• Market-based reverse bidding mechanism to determine least VGF to select the airline operator with the right to match to the initial proposer.
• The government said VGF will be reduced if passenger load factor remains high and will be discontinued after 3 years when route becomes self sustainable.

Source

·         The Hindu, AAI.