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UDAN 2.0 to focus on overseas flights 

Financial Express , Mar 09, 2018

Buoyed by the success of Ude Desh ka Aam Nagrik or UDAN, the government is working on another version of the scheme. States will now have the option to subsidise international flights from regions that are under-served but have the latent demand to become sizeable markets. “UDAN Version II will allow the state governments to provide subsidy for international flights to be launched from their states. UDAN has now become a platform where we have the expertise and the capability. If the state governments want to start flights to international destinations, the central government will provide a platform,” civil aviation secretary Rajiv Narayan Choubey said. Choubey, who was addressing the media at the four-day international aviation summit Wings, said Assam has decided to offer Rs.100 crore annually for three years to launch international operations from Assam to the Southeast Asian markets.

The civil aviation secretary said that the government’s biggest challenge today in the rapidly expanding Indian aviation market, which is growing at nearly 18%, is offering airport infrastructure, and that too quickly. The Airports Authority of India (AAI) has a capex plan of Rs.18,000 crore to be spent over next four years for airport expansion. The government is looking at some very fundamental changes to be made in the way airports are bid out and also in the way concession agreements are structured with investors. Choubey said the government is reworking the concession model for airports to make it investor friendly, and this revised model will be out in six months. The secretary said that the second thing the ministry is looking at is amending the AAI Act. Currently the Act does not allow land to be monetised in a reasonably free manner, with city side development only reserved for the passenger amenities. The government is also looking at removing uncertainty around the regulatory framework for both greenfield and brownfield airports for the next 50-60 years, as this hinders investment. “Therefore, the government is amending the Airport Economic Regulatory Authority Act to make sure that regulatory uncertainty is removed. Any airport that is bid out in a manner where tariff is built into the bid document and concession agreement itself, the regulator shall have no role and the investor will know upfront that this is what he will get by the way of regulatory tariff,” Choubey said. The government, as announced in the Budget this year, will also leverage and monetise AAI’s balance sheet so that normal capital expenditure that AAI incurs goes up by at least five times. “AAI needs to spend at least Rs 15,000 crore every year for airport infrastructure and we are looking at a template for asset monetisation and leveraging the balance sheet of AAI, so that enough money is raised and airport development does not lag,” the secretary said.



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