Why in news? The government has launched the fifth round of the Regional Connectivity Scheme — UDAN 5.0 — to further enhance the connectivity to remote and regional areas of the country.

Highlights:

• the Ministry of Civil Aviation (MoCA) on April 21 initiated the process of inviting bids from airlines for various routes under this fifth round of bidding for its regional connectivity scheme UDAN by releasing a bid document.

About UDAN 5.0

• According to the Ministry of Civil Aviation, only aircraft operations of Category 2 (20-80 seats) and Category 3 (>80 seats) will fall in this round with no restriction on the distance between the origin and destination, with stage length cap of 600 km waived
• viability gap funding (VGF) to be provided will be capped at 600 km stage length for both Priority and Non-Priority areas which were earlier capped at 500 km and no predetermined routes would be offered.
• Only Network and Individual Route Proposal proposed by airlines will be considered and the airlines would be required to submit an action/business plan after two months from the issuance of Letter of Authorisation (LoA) wherein they submit their aircraft acquisition plan/availability of aircraft, crew, slots, etc. at the time of the technical proposal.
• the same route would not be awarded to a single airline more than once, whether in different networks or in the same network and “Exclusivity will be withdrawn if the average quarterly passenger load factor [PLF] is higher than 75% for four continuous quarters, to prevent exploitation of the monopoly on a route.”
• 25% of the Performance Guarantee to be encashed for each month of delay up to four months, to further incentivise quick operationalization. A performance guarantee is an enforceable commitment by a corporate entity to supply the necessary resources to a prospective contractor and to assume all contractual obligations of the prospective contractor.
• Airlines would be required to commence operations within four months of the award of the route. Earlier, this deadline was six months.
• Novation process for routes from one operator to another is simplified and incentivised. Novation refers to the process of substituting an existing contract with a replacement contract, where the contracting parties reach a consensus.

About UDAN Scheme

• It was launched as a Regional Connectivity Scheme (RCS) under the Ministry of Civil Aviation in 2016, to provide affordable, economically viable and profitable air travel on regional routes to the common man even in small towns.
• It envisages providing connectivity to un-served and underserved airports of the country through the revival of existing airstrips and airports.