PM Modi's Rs 2,500 flight ticket plan: The devil in the details

The aviation minister Pusapati Ashok Gajapathi Raju formally launched the UDAN (Ude Desh ka Aam Nagrik) scheme that promotes regional connectivity and makes flying affordable for common man. The key highlight of the scheme is that airfares will be capped at Rs 2,500 for one-hour flights on regional routes. The intent of the government is to fly 300 million domestic passengers by 2022 from 85 million in 2015/16. The target looks ambitious; and hence, the capping of fares is necessary.

According to global consultancy AT Kearney, there are about 33 airports in India where narrow-body Airbus and Boeing could land because; the remaining airports have short runways and a lack of high-speed runway exits. "For instance, Mysore, Kohlapur and Jamshedpur have potentially high-traffic airports that are hampered by inadequate flight accommodations. Although airstrips are undergoing some modernization, many would only be capable of handling regional aircraft in the medium term because of runway length restrictions. Even after modernization, demand out of such airports would be ideally served with a mix of both regional and narrow-body aircraft," says AT Kearney report. At the moment, a large chunk of aircraft flown in India (about 468) is narrow body. For instance, the largest carrier IndiGo flies just Airbus A320 (a narrow-body). Airlines would strongly resist introducing regional (or smaller) aircrafts such as turboprops in their fleet because of complexities associated with operating more than one type of aircraft.

A few airlines that BT spoke with says that they are not comfortable with government's involvement in fixing fares, even if it will lead to more passengers flying with them. The constant dealing (and negotiations) with government will be an added burden. However, some think otherwise. "The entire thing will be funded by the government. Of course, the devil is in detail but a policy statement is not supposed to go into detailing. It's for the first time the government has come up with an aviation policy. We should not draw conclusions so early," says Milan Zatakia, chairman and CEO of Millennium Aero Dynamics, an aircraft service provider and manufacturer.

Starting January next year, the first flight - where the tickets will be priced at Rs 2,500 per passenger - is likely to take off. To begin with, the scheme will be funded by a small levy on flight landings at key airports in the country. Flying has an aspirational value attached to it, and the idea of making flying affordable does have a mass appeal.  Right now, it's largely driven by sops - given that costs are being borne by existing passengers and the government - rather than free market principles.