Union Budget: What’s in it for aviation?

| Video Credit:
The Hindu

A look at what the Union Budget 2025 had in store for the aviation sector. 

A modified UDAN scheme will be launched to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years. The scheme will also support helipads and smaller airports in hilly and aspiration districts. 

Reporting: Jagriti Chandra

Video: Sabika Syed

.Editing: Shiva Raj

Civil Aviation Minister K. Rammohan Naidu File
| Photo Credit: ANI

The government will extend the regional air connectivity scheme UDAN (Ude Desh ka Aam Nagrik) for 10 more years, Civil Aviation Minister K. Rammohan Naidu said on Monday (October 21, 2024).

UDAN has led to the birth and growth of regional airlines, generation of jobs and contribution to tourism, the Minister said at a function in the national capital to mark eight years of the scheme.

Also read: Govt says UDAN generating demand for new aircraft

As many as 601 routes and 71 airports have been operationalised under the regional air connectivity scheme.

UDAN is aimed at enhancing regional air connectivity and making flying more affordable. It was introduced on October 21, 2016 for 10 years.

The Minister said the scheme will be extended for another 10 years.

Civil Aviation Secretary Vumlunmang Vualnam said the Ministry is looking at the financial viability aspects and streamlining of the procedures under the scheme.

“A total of 86 aerodromes — comprising 71 airports, 13 heliports, and 2 water aerodromes — have been operationalised, facilitating the travel of over 1.44 crore passengers across more than 2.8 lakh flights,” the ministry said in a release on Sunday.

Meanwhile, the number of operational airports in the country has doubled from 74 in 2014 to 157 in 2024 and the aim is to increase the count to 350-400 by 2047.

UDAN transformed India’s aviation sector: PM Modi

Meanwhile, Prime Minister Narendra Modi said on Monday (October 21, 2024) the government’s UDAN scheme has transformed India’s aviation sector.

It has led to an increase in the number of airports and air routes, ensuring that crores of people have access to flying, he said on X on the eighth anniversary of the scheme.

“At the same time, it has had a major impact on boosting trade and commerce and furthering regional growth. In the times to come, we will keep strengthening the aviation sector and focusing on even better connectivity and comfort for the people,” he said.

IATA Director General Willie Walsh said that the aviation sector has recovered from the Covid-19 pandemic. File
| Photo Credit: Reuters

The global airline industry is expected to record a profit of $1 trillion for the year 2024 as it marks its recovery from the Covid-19 pandemic, according to the International Association of Air Transport Association (IATA). “Aviation has recovered from the pandemic and is growing profitably,” Willie Walsh, Director General of IATA, said at its 80th Annual General Meeting being held in Dubai.

Though the industry will witness record revenues of almost $1 trillion in 2024, expenses will also be at a record high of $936 billion. The net profit will be $30.5 billion, which represents a net margin of just over 3%, Walsh said in his opening remarks. He underlined that airlines only retain $6.14 of profit per passenger.

However, a fiercely competitive environment among airlines and the oligopolistic upstream supply chain’s lack of competition will continue to squeeze the airline industry which is expected to earn a 5.7% return on invested capital which is well below the average 9% cost of capital.

[The reporter is in Dubai at the invitation of IATA]