Viability Gap Funding for UDAN

Terming the government’s regional air connectivity scheme UDAN a big success, Spice-Jet chief Ajay Singh has said the airline has not taken the viability gap funding (VGF) so far as the routes operated by it under the scheme are financially viable on their own. UDAN (Ude Desh ka Aam Naagrik) aims to connect unserved and under-served airports as well as make flying more affordable for the masses. SpiceJet has bagged routes in the first and second rounds of bidding under the scheme. “On UDAN, our philosophy at SpiceJet is that wherever VGF is not required, we will not take it because the government should use the money where it is required,” Ajay Singh said. “So far this has proved to be right because all the sectors we are flying as yet are financially viable without VGF,” he said.

Airlines participating in the scheme are extended VGF which is shared by the respective state government and the Centre as well as certain other incentives. The Centre contributes 80 per cent of the VGF amount, while the remaining comes from the state governments concerned and in the case of North-Eastern states and union territories, the sharing ratio is 90:10. The CMD SpiceJet said that UDAN has been a big success as so many unused airports in smaller cities are now coming into use. The budget carrier SpiceJet operates an average of 402 flights daily to 51 destinations, including seven international ones. It has a fleet of 38 Boeing 737NG and 22 Bombardier Q400s.