Now that there is UDAN isn't it time for the Government to get rid of the Route Dispersal Guidelines (RDG)? I mean why do airlines have to use their profits from profitable routes to subsidize unprofitable ones that the Government wants them to run? In my opinion, it is not the role of private companies to subside Government policy.
Below is the Governments RDG:
Route Dispersal Guidelines (RDG)http://www.civilaviation.gov.in/sites/d ... 16-2_1.pdf
RDG was introduced in 1994 to provide air connectivity to Jammu and Kashmir, North East Region, Andaman& Nicobar Islands, Lakshadweep, Tier-2 and Tier-3 cities, by way of internal cross-subsidy by airlines using their revenues on the Trunk Routes (12 in number). RDG has succeeded in creating connectivity to remote locations. At present, the capacity actually deployed on Category II and III routes is in excess of the RDG threshold, highlighting the business potential in these regions. The following action will be taken to rationalise the RDGs:
a) Category I routes will be rationalised once in five years, by adding more routes based on transparent criteria. The criteria proposed for a Cat I route are a flying distance of more than 700 km, average seat factor of more than 70% and annual traffic of 5 lakh passengers over two full schedules (i.e. summer and winter), based on information available with DGCA. MoCA will endeavour that the rationalization of Cat I routes does not cause undue financial and operational burden on airlines and sufficient time will be provided to them for adjusting their future
schedules, as indicated in (d) below..
b) The traffic to be deployed on Cat II and IIA routes expressed in terms of a percentage of CAT I traffic will remain the same. However, routes to Uttarakhand and Himachal Pradesh will be included in Category II. For CAT III routes, the percentage will be 35% of CAT I traffic in view of the fact that RCS is being implemented for a similar purpose.
c) For the purpose of meeting the RDG requirements, the Scheduled airlines (both Air Transport Operator and Commuter Operator) will be permitted to trade Available Seat kilometres (ASKM) of helicopters and other small aircraft (maximum AUW not exceeding 40 tons) operating under Regional Connectivity Scheme to extend the last mile connectivity seamlessly to under-served or un-served areas.
d) Revised categorization of routes under RDG will apply from the winter schedule of 2017 in order to allow sufficient time to airlines to plan their operations. The review of routes under different categories will be done by MoCA once every 5 years after its first revision in 2016 (effective from the winter schedule of 2017).
e) Withdrawal or revision of domestic operations to and within North East Region, Island territories and Ladakh, subject to full compliance of RDG, can be done under prior intimation to MoCA and DGCA at least three months before the withdrawal or revision of the service.