How the UDAN scheme is benefiting Hyderabad

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On April 24, 2017, the Indian prime minister Narendra Modi flagged off the initial flight between Shimla and New Delhi to commence the government-funded UDAN project. UDAN stands for Ude Desh ka Aam Naagrik. This is a scheme aimed at enhancing regional connectivity between some 43 Indian cities that were lagging behind when it comes to proper and efficient air transportation systems.

The Indian subcontinent is a vast territory with a very high population. In fact, the country is the second most populous in the world after China. For this reason, cheap, fast and efficient transportation means are a necessity for enhanced regional connectivity. This has the potential to enhance trade and other economic activities.

Previously, most of the cities that fall under this project were underserved by insufficient air transport. Some regions have short runways that can only accommodate small aircraft leaving a huge gap in supply. Other regions had non-functional airstrips that require renovation. The UDAN project mostly focuses on short-haul routes consisting of distances of up to 800 km in length. The stakeholders have adopted a market-based mechanism which takes into account environmental conservation and the reduction of the program’s carbon footprint.

The first airline to commence flight operations was Alliance Air. This is a subsidiary of the national carrier Air India and the first route was between Shimla and Delhi as per the RCS or Regional Connectivity Scheme. The original aircraft chosen for the program was the ATR-42. This is a 48-seater all-economy class aeroplane that started operating from the 28th of April 2017.

However, the limited runway length, altitude and temperature limitations did not allow the aircraft to fly at full capacity. Subsequently, the addition of larger and faster jet aircraft has increased the number of passenger and cargo traffic.

A total of 128 routes have been awarded to five airlines that will operate under this scheme. These are SpiceJet, Alliance Air, Turbo Megha, Air Deccan and Air Odisha. This scheme is also part of the National Civil Aviation Policy released on the 15th of June 2016. Through it, the government aims at providing affordable flights by capping ticket prices at 2500 rupees per seat per hour.

To bridge the discrepancy between the cost of operating airlines and the projected revenue, the chosen airline operators were granted Viability Gaps of a certain amount. In return, each state had to make a commitment to avail the requisite land, provide enough security as well as the essential services at subsidized rates for the improvement of airports or airstrips.

The city of Hyderabad is one of the major beneficiaries of this program. It serves as the administrative and commercial capital of the state of Telangana. It is located along the banks of River Musi and occupies an area of roughly 650 km2. The total population of the city is roughly 6.9 million whereas the larger Hyderabad metropolitan area has a population of approximately 9.7 million people making it the 4th most populous city in the country.

The GDP of the region amounts to between 40 to 70 billion US dollars. Therefore, UDAN project has the potential to further increase the productivity of this region. Local business travellers will be able to make quick flights into and out of the city for business transactions and deals.

Hyderabad has a booming service industry. Through this program, industries such as IT, hospitality, hotels, restaurants, entertainment, sports and tourism and the like have witnessed tremendous growth in business. Local tourists can easily visit the city as well as international tourists who make connecting flights.

There are many cultural and national heritage sites within Hyderabad. The tourists can now easily access them. Such include the Golconda Fort, Char Minar, the Shree Jagannath Temple and the Birla Mandir Temple among many others. As a matter of fact, there are over 40 tourist destinations all over the metropolitan area. All these have seen an upsurge in visits thanks to the regional connectivity provided by the program especially the Delhi to Hyderabad flights.

Such industries employ a lot of people since most of them do not require highly technical skills. In fact, close to 90% of the population works in the service industry. The UDAN program has provided a splendid opportunity for a majority of the youth to find some meaningful employment. Jobs such as driving, accountancy, bookkeeping, catering, etc. have heavily been boosted due to tourism. Small scale businesses have also received a shot in the arm as regional travellers interact and exchange their goods and services. The local informal traders can sell their artefacts, clothing items, foodstuff and other basic commodities.

Hyderabad is known for its pearl trade. In fact, it is colloquially known as the ‘city of pearls’. The UDAN project has served in expanding the pearl business both locally and regionally. Traders can now quickly transport the pearls through air cargo and they arrive much faster. The cheap rates and periodic discounts also mean that the bigger merchants can benefit from economies of scale as they offer larger quantities at cheaper prices.

There are also a number of industries that provide skilled employment to the locals. These include electrical industries, mineral processing companies and aeronautics. The boom in regional travel and trade provided by the program has expanded the market for these industries. The aeronautics industry plays a key role in the maintenance and servicing of the many aircraft that visit the metropolis. The economic empowerment brought about by the rise in trade and commercial activities enables the locals to purchase more of the electronic devices manufactured by the local companies. The IT industry also flourishes under the same circumstances. Furthermore, these goods and processed minerals can now be easily transported to nearby cities and towns much faster as compared to road and rail transportation.

All these flurries of activities have enhanced the standard of living of a significant proportion of the city’s inhabitants. They are now able to afford better housing facilities and social amenities. The government also collects more revenue that can now be steered towards improving basic infrastructure as well as the creation of an enabling environment for business.

With a good quality of life and financial security, the locals can now spend more time in leisure and spend money on luxuries, entertainment, travelling and shopping. All these serve to stimulate a greater circulation of money within the economy. This further serves to attract external investors.

This city hosts the Hyderabad securities and also has a regional office of the Securities and Exchange Board of India. The provision of operations and transaction services by the Bombay Stock Exchange Facility in Hyderabad has greatly enhanced the growth of the financial sector within this metropolitan city. This has enabled Hyderabad to evolve from a traditional manufacturing centre to an industrial service centre. Coupled with regional integration, Hyderabad is now close to becoming the regional financial capital.

In conclusion, regional integration has a lot of positive effects. It leads to larger markets for goods and services, numerous employment opportunities, economic development and growth, and industrialization. The UDAN program was a brilliant idea that has greatly served in giving Hyderabad a bright future.