New Delhi: Ratings agency ICRA on Wednesday estimated that passenger traffic generated from the central government`s ambitious regional air connectivity scheme UDAN would be around 4.43 lakh passengers only during FY2018.


COMMERCIAL BREAK
SCROLL TO CONTINUE READING

According to a study conducted by ICRA, UDAN`s impact would be marginal at 0.4 per cent of total passenger traffic during the year. 


The report pointed out that the majority of the RCS routes are expected to operate only for six-to-nine months during FY2018 as per the current schedule. 


"Once the routes are operational for full year, the traffic contribution is expected to be 0.6 per cent (6.94 lakh passengers). Even with optimistic assumptions for PLFs (passenger load factors) as well as number of flights on RCS routes, the contribution of RCS passenger traffic remains modest at 0.7 per cent during the fiscal," the study said.


The government announced the UDAN scheme in October 2016 with the key objective to facilitate balanced and affordable regional air connectivity through fiscal support and regional infrastructure development. 


In March 2017, five airlines were selected to operate a total of 128 routes connecting 65 distinct destinations and 45 RCS airports under phase-I of the scheme.


"The full potential of phase-I will be realised in FY2019 when the impact of RCS on overall industry is expected to increase. Further, the expected phase-II auction would add to the RCS traffic," said Anand Kulkarni, Assistant Vice President and Associate Head - Corporate Ratings, ICRA.


"We expect the contribution of RCS traffic to overall industry to increase to 1.5-1.8 per cent during FY2019. However, issues like possible delays in matters like air operator permit (AOPs) issuance, readiness of airports, availability of adequate crew and presence of safety mechanisms could cause variations in estimates."