DNA Money Edit: SpiceJet, IndiGo plans signal confidence in Udan

Market leader IndiGo's announcement on Tuesday to induct 50 ATR planes as part of its plan to get into regional connectivity scheme (RCS) is a sign that almost all the mainline airlines are seeing potential in it.

IndiGo's announcement to participate in the RCS, also known as Udan (Ude desh ka aam naagrik) comes after the Centre, in the first round, awarded 128 routes to connect 70 airports to Air Alliance (a subsidiary of Air India), SpiceJet, Air Deccan, TruJet and Air Odisha Aviation.

The keenness on the part of the mainline airlines comes as a U-turn after the Federation of Indian Airlines (FIA) - a lobby group of which IndiGo and Spicejet are members - had approached the court challenging the government over levying Rs 7,500- 8,500 per flight on trunk routes for funding the scheme.

SpiceJet's move to participate in RCS, followed by IndiGo, obviously hints at the dilution of the FIA's demand as its members definitely now see more gain from it even as the levies will anyway be passed on to the passengers.

Jet Airways, which has about two dozen ATRs in its fleet, has not yet applied for the RCS bidding. Earlier, Tata Group-backed Vistara too, in an interview with DNA Money, had expressed interest in getting into regional connectivity by having a different autonomous entity for it.

Though the mainline airlines and others joining the bandwagon are betting big on the RCS, things are not going to be smooth all the way, especially since the passenger growth is expected to slow down to 13-15 % during the fiscal year 2018 in comparison to the previous years, when the domestic passengers growth consistently touched over even surpassed 20%.