Airlines may lose out in UDAN phase-2 bid for below-par performance

Five airlines, including SpiceJet, had won bids to operate on 128 routes in the first round of RCS bidding

Airlines' performance and progress in starting flights on the routes won in the first round of bidding under the regional connectivity scheme will be taken into consideration before awarding them more routes, a senior government official has said.

The second round of bidding under the scheme, also known as UDAN (Ude Desh ka Aam Nagrik) is progressing and as many as 141 initial proposals from 17 players have been received.

In the first round of bidding, 128 routes that would connect 70 airports were awarded to five airlines and some of them are yet to start operations.

Against this backdrop, Civil Aviation Secretary R N Choubey has said the performance of airlines that have won routes in the first round would be taken into account while deciding on award of routes in the second round.

"If we find that their (airlines) progress is not up to the mark, then we will not rush into awarding any route in the second round of bidding if they have won. We would like to link their performance and progress in the first bidding round to any route that they may have won in the second round of bidding," he said on Tuesday.

He also stressed that performance of such airlines would be monitored.

Five airlines, including SpiceJet, had won bids to operate on 128 routes connecting 70 airports in the first round of RCS bidding.

Air Odisha Aviation got a maximum number of 50 routes followed by Air Deccan (34) and Turbo Megha Airways (18). The Air India subsidiary Airline Allied Services bagged 15 routes while SpiceJet won bids for 11 routes.

However, Air Deccan and Air Odisha are yet to start operations on account of various factors, including issues related to the availability of slots.

According to Choubey, Air Odisha and Air Deccan are expected to commence significant part of their operations by December 15.

About collection of RCS levy, he said the paperwork- related to Goods and Services Tax (GST) is under progress.

Under RCS, airlines are eligible for viability gap funding. The amount is shared between the Centre and the states concerned. The levy is collected per departure from airlines operating flights on major routes.

"Since the GST has come, there are some exemptions we have to seek. The paperwork has already started.

"We are working in a certain manner of ensuring that there is no reduction in the availability of funds (for RCS) on account of GST. The exact process is being discussed with the Department of Revenue," Choubey said.

A trust has been set up under the Airports Authority of India (AAI) where the levy collections are parked.