Exponential Growth in Regional Air Connectivity with an Impetus to Stimulate Helicopters and Small Fixed – Wing Aircraft Operations

New Delhi. 24 January 2018. Ashok Gajapati Raju, Minister of Civil Aviation has informed that key revisions in Scheme under 2nd Round of RCS-UDAN covering Priority areas, operational flexibility, Helicopter operations, etc have been made. Addressing the media persons here today, he informed that, “In pursuance of the Government policy relating to “Ease of Doing Business” and “UDAN- facilitating regional air connectivity by making it affordable for masses”, the following key policy initiatives have been taken under UDAN-2.

Jayant Sinha, MOS, Civil Aviation, Rajiv Nayan Choubey, Secretary and senior officials were also present on the occasion.

Key policy initiatives under UDAN-2:

5.   Focusing Priority Areas to expand the Remote Area connectivity

• Priority Area(s)’ shall mean the States of Jammu and Kashmir, Himachal Pradesh & Uttarakhand, North Eastern Region, Andaman and Nicobar Islands and Lakshadweep Islands.
• ‘Priority RCS Route’ shall mean an RCS Route in which at least one of the origin and destination airport is an RCS Airport located in Priority Area(s). RCS Airport satisfies definition of Underserved Airport or Unserved Airport under the Scheme. ‘Underserved Airport’ shall mean any airport which has no more than fourteen (14) scheduled commercial flight departures per week as per the latest flight schedule published by the DGCA on its website.
• Maximum Number of Flights for Priority RCS Routes: Number of RCS Flights/week with VGF, shall be   a minimum of three (3) and a maximum of fourteen (14) departures per week from the same RCS Airport. RCS Flights are operated on at least three (3) days of the week.
• Operations through Category-1A aircraft (with passenger seats less than 9) will be permitted only for Priority RCS Routes.
• Enhanced VGF Caps for operations through Category-1 A and Category-1 Fixed-wing aircraft for Priority RCS Routes. Further, the Airfare caps and VGF Caps have been specified for stage lengths less than 151 Km and Priority RCS Routes / Category 1A aircraft.

5.  Providing impetus to Helicopter services

• Helicopter operations under the Scheme are allowed in Priority Areas (intra).

• VGF Caps for helicopter operations enhanced: Upto 10% of the estimated annual inflows in the RCF shall be earmarked for operations through helicopters.

• Methodology for computing the Flight duration revised as per Recommendation of Expert Committee.
• 100% RCS seats for Helicopters with RCS Flight capacity of 13 seats or less. For more than 13 seats, number of RCS Seats in an RCS Flight shall be capped at 13 passenger seats.
• RCS Flights take Off

On 27th April, 2017 Hon’ble PM flagged off the first UDAN flight under RCS on Shimla-Delhi sector. Simultaneously Hon’ble PM also flagged off the inaugural UDAN flights on Kadapa – Hyderabad and Nanded-Hyderabad sectors through video-link. Since then Flights under UDAN-1 have commenced from 16 RCS airports namely, Agra, Bhatinda, Gwalior, Kadapa, Kandla, Ludhiana, Mysore, Nanded, Pondicherry, Porbandar, Ozar (Nasik), Shimla, Vidyanagar, Bikaner, Jaisalmer and Jalgaon.

• Routes awarded under RCS – UDAN during the 2nd Round of Bidding 

Airports Authority of India (AAI), the implementing agency, has issued Letter of Awards for 90 proposals received under RCS-UDAN after completion of the Second round of bidding. Key features of the proposals awarded by AAI include:

• Airports to be connected: Total 78 airports i.e., 36 currently served airports, 13 currently Underserved Airports and 29 currently Unserved Airports (25 distinct airports after removing the 4 overlapping airports from UDAN-1) will be connected. In addition, 31 helipads/ heliports will be connected through Helicopters in the Priority areas.
• Viability Gap Funding (VGF) Outflow: These proposals will required  VGF estimated at Rs. 487 crores per annum for Fixed wing operations and Rs.130 crores per annum for Helicopter operations in the Priority areas.
• Region wise allocation of Annual VGF outflow in respect of Fixed wing aircrafts operation in UDAN-2 is expected to be as follows;

(Figures in Rupees/crores)

*   Excluding the VGF for Helicopters which is Rs.130 crores per annum in the priority areas.

• It is expected that the Fixed wing aircrafts proposals will provide around 26.5 lakh RCS seats per annum of which will be covered by airfare cap of Rs. 2500 for approximately one hour of flying.  In addition, around 2 lakhs RCS seats per annum are expected to be provided through Helicopter operations.
• UDAN is a key component of the National Civil Aviation Policy (NCAP) which was released by the Ministry on 15th June 2016. Ministry of Civil Aviation has launched Regional Connectivity Scheme in October, 2016 with prime objective to facilitate / stimulate regional air connectivity by making it affordable for masses. After the 1st Round of successful bidding under RCS-UDAN, MoCA had launched the 2nd Round on 24th August, 2017.
• Extensive consultation to improve the Scheme

RCS- UDAN is very innovative and based on a unique business model formulated for the first time at Government framework level. The operation of the Scheme is  through a market mechanism where operators will assess demand on routes, submit proposals for operating / providing connectivity on such route(s), seek VGF, if any, while committing to certain minimum operating conditions and the same shall be finalized in interaction with other market participants as provided for in this Scheme. The Scheme has been implemented with extensive Stakeholders’ consultation in a transparent manner. In pursuance to the vision of Government to provide impetus to the RCS-UDAN, MoCA had organized several interactive events to further widen the consultative process with the Stakeholders. Stakeholders were encouraged to share their views / suggestions along with justification / rationale for the proposed changes to enable MoCA / AAI make informed decisions on various matters.

• Key UDAN features

The passenger airfare for one hour journey of 500 km on a fixed wing aircraft or for a 30 minute journey on a helicopter would be capped at Rs. 2,500, with proportionate pricing for routes of different stage lengths / flight duration. The selected airline operator would have to provide 50% of the flight capacity (subject to a minimum of 9 and a maximum of 40) as RCS Seats for operations through fixed wing aircraft and a maximum of 13 RCS Seats on the RCS Flights for operations through helicopters. Where the fixed wing aircraft has less than 9 passenger seats, then all such seats would be RCS seats. Selected Airline operator would be given a three years exclusivity of operations. To reduce the cost of operations of airlines on flying such routes, a financial stimulus in the form of concessions from Central and State government, airport operators and the Viability Gap Funding to the interested airlines would be provided to kick-off operations from such airports, so that the passenger fares are kept affordable. State Government will provide a certain share of VGF (20% for States other than North-East States where the ratio will be 10% of VGF determined). In this regard, till now 29 States and UTs have signed MoU.