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Covid second wave may slow down UDAN’s flight

New Delhi, July 20 (UNI): UDAN (Ude Desh ka Aam Naagrik) scheme of the Ministry of Civil Aviation may face headwind owing to financial stress on airline operators aggravated by second wave of Covid-19, private rating agency ICRA said in a statement on Tuesday.

UDAN scheme was launched in 2016 by the Ministry of Civil Aviation (MoCA) to promote regional air connectivity. Under the scheme, air operators have to offer at least 50% of seats at fixed subsidised fare. The loss occurred is compensated by the ministry as viability gap funding.

ICRA expects muted response to UDAN 4.1 bidding as airlines have stressed balance sheets after second wave of Covid-19.

“The award and implementation of UDAN 4.1 may get delayed significantly due to the second wave of the pandemic in India and its effect on the Indian aviation industry,” said Shubham Jain, SVP & Group Head, Corporate Ratings, ICRA.

MoCA has set a target of operationalising 100 unserved and underserved airports and starting at least 1,000 RCS routes by 2024. Of this, 52 unserved and underserved airports and 357 routes are operationalised as on May 31, 2021, ICRA said.

“ICRA expects the target of operationalising 100 airports under UDAN by 2026, with a delay of two years from revised schedule (of 2024 from earlier 2019). The weak credit profile of domestic airlines is expected to have an impact on the existing routes under UDAN scheme, particularly for smaller airlines given the stretched liquidity position, low utilisation in some of the routes and will also impact future bidding of routes under the scheme,” Jain added.

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