Air­port Au­thor­ity of In­dia’s Ex­ec­u­tive Direc­tor (RCS), G.K. Chaukiyal tells Ar­pita Kala of SP’s AirBuz why the Re­gional Con­nec­tiv­ity Scheme is go­ing to work

SP's Airbuz - - Front Page -

WHILE MANY EX­PERTS AND crit­ics seem to dis­agree with Fi­nance Min­is­ter Arun Jaitly’s am­bi­tious foghorn with re­gard to the Re­gional Con­nec­tiv­ity Scheme (RCS), here’s some food for thought when it comes to UDAN. Fresh out of the sec­ond round of bid­ding for the RCS, which will also see the in­clu­sion of he­li­copters in the fleet, G.K. Chaukiyal, Ex­ec­u­tive Direc­tor (RCS), Air­port Au­thor­ity of In­dia says UDAN III may not hap­pen im­me­di­ately. He says, “We should fo­cus on im­ple­men­ta­tion first...mak­ing sure 80-90 per cent of these routes are op­er­a­tionalised first be­fore we go in for the third round of bid­dings. Prob­a­bly by the next round we can think about in­tro­duc­ing seaplanes and cargo freighters in a lim­ited amount.” SP’s AirBuz (SP’s): What have been the mini suc­cesses in UDAN so far? G.K. Chaukiyal (Chaukiyal): It’s a 10-year long scheme and we al­ready have awarded two rounds of bids. In the first round, we have al­ready awarded 27 bids with 128 routes, it’s ba­si­cally a de­mand driven scheme. Out of that 36 routes have al­ready com­menced. For the sec­ond round, on Jan­uary 24, 86 bids were awarded in­clud­ing he­li­copters too. Last time only five air­lines par­tic­i­pated in the bid­ding, not many full-fledged air­lines took part such as those hav­ing sched­uled air­line op­er­a­tor per­mit ex­cept SpiceJet and Tru­Jet, but this time Jet Air­ways, Indigo and others are also there. SP’s: Is it true that UDAN, is fac­ing a funds cri­sis be­cause the num­ber of par­tic­i­pat­ing air­lines has in­creased man­i­fold? While the govern­ment’s ini­tial as­sess­ment for the scheme was 3 bil­lion, a man­i­fold rise in the num­ber of par­tic­i­pat­ing air­lines has in­creased the re­quire­ment to 12 bil­lion. Chaukiyal: No, we are able to man­age. Ba­si­cally, we are levy­ing a sum of 5,000 per de­par­ture from air­lines on trunk routes, prof­itable routes such as Delhi to Mum­bai or Ben­galuru, etc. That’s how we are get­ting around 300 crore and then, 20 per cent of the VGF (Vi­a­bil­ity Gap Fund­ing) is be­ing paid by the state gov­ern­ments.

So, we are get­ting around 330 crore an­nu­ally. But we will be award­ing routes and net­works worth around 550 crore dur­ing the sec­ond round of bid­ding be­cause Min­istry of Fi­nance has agreed to re­lease about 200 crore from the div­i­dend that AAI was pay­ing and even plan to take the num­ber higher to about 500 crore next year. That’s how the fund­ing is be­ing ar­ranged and we are able to award these routes. So, there is no cri­sis at the moment. SP’s: Hi­machal gets a gift of air con­nec­tiv­ity in the form of Pawan Hans un­der UDAN II. How safe are the Pawan Hans he­li­copters fit­ted with Safran en­gines for UDAN II? Chaukiyal: Avi­a­tion is one of the safest modes of transport if you check the sta­tis­ti­cal data avail­able on­line. Air miss/near-miss in­ci­dents hap­pen but fa­tal ac­ci­dents are rare in avi­a­tion. There have been a cou­ple of he­li­copter in­ci­dents but there is a strong reg­u­la­tory mech­a­nism in the Min­istry of Civil Avi­a­tion for tech­ni­cal and safety mat­ters, that’s DGCA (Direc­torate Gen­eral of Civil Avi­a­tion), so, it’s taken care of. SP’s: What con­ces­sions are be­ing given to air­lines to move ex­cess ca­pac­ity to Tier-II towns? Chaukiyal: There are ba­si­cally two types of con­ces­sions. One is the VGF, where we are col­lect­ing levy from trunk routes and giv­ing to the re­mote routes. Others are in-built in the scheme it­self

such as ex­clu­siv­ity for three years that al­lows any air­line to have sole mo­nop­oly over the route they have been awarded.

You can see in the sec­ond round of bid­ding that there are 25 new, un-served air­ports com­ing up. Apart from that, 31 he­li­ports will be con­structed by state gov­ern­ments with the help of Pawan Hans Ltd. So, 56 new des­ti­na­tions are open­ing up in the sec­ond round of bid­ding.

State govern­ment will also re­duce VAT to 1 per cent or less on ATF (Avi­a­tion Tur­bine Fuel) in the RCS air­ports and cen­tral govern­ment will also charge just 2 per cent ex­cise duty on ATF. Since 40 per cent of cost of oper­a­tion of any air­line is ATF, this is a big con­ces­sion. Most of the states have al­ready signed MoU agree­ing to this. Apart from this, RCS flights won’t be charged for park­ing and land­ing, and Route Nav­i­ga­tion Fa­cil­ity Charges (RNFC) levied will be only 42.5 per cent. SP’s: How many new air­ports are com­ing up un­der UDAN? Is there a spe­cific ra­tio be­tween low-frill and high-frill air­ports? Chaukiyal: No, there isn’t a spe­cific ra­tio but mostly the air­ports in un-served ar­eas are no-frill air­ports, which are be­ing re­vived in UDAN. SP’s: Are there any air­port projects un­der the PPP in­vest­ment model? Chaukiyal: The Min­istry of Civil Avi­a­tion has al­ready given in­prin­ci­pal ap­proval to about 15-16 air­ports un­der PPP model. These air­port pro­pos­als are ba­si­cally ini­ti­ated by the state gov­ern­ments. Al­ready work is go­ing on in Mopa and Navi Mum­bai. Kan­nur In­ter­na­tional Air­port, is not ex­actly PPP, around 60 per cent of the eq­uity is owned pri­vately, but it’s be­ing de­vel­oped by state govern­ment on be­half of the public. This air­port is com­ing un­der RCS too, there are 12-13 routes con­nect­ing all ma­jor air­ports in In­dia to Kan­nur. So, any air­port un­der the PPP model is open for RCS bid­ding should any air­line choose to op­er­ate from there and con­cerned state govern­ment is ready to in­clude the air­port in RCS. SP’s: Will seaplanes be added to the UDAN port­fo­lio soon? Chaukiyal: The dis­cus­sions are go­ing on be­cause reg­u­la­tory frame­work is yet to be fi­nally de­cided. Like reg­u­la­tions for air­ports are for­mu­lated by DGCA (Direc­torate Gen­eral of Civil Avi­a­tion) and BCAS (Bureau of Civil Avi­a­tion Se­cu­rity) but for seaplanes it is yet to be de­cided. SP’s: The UDAN ini­tia­tive, al­though good, is un­likely to work due to ex­e­cu­tion chal­lenges. What do you think can be the big­gest de­ter­rent to the RCS? Chaukiyal: This is a de­mand-driven scheme and air­lines are sup­posed to do their due dili­gence by car­ry­ing out the vi­a­bil­ity sur­vey and all. We will do our bit by pro­vid­ing them the nec­es­sary sup­port. But, I am sure that at least two-thirds of the UDAN routes will be vi­able even after the stip­u­lated three years. Al­most 20 out of the 86 pro­pos­als we have re­ceived have zero VGF and that means that these net­works are prof­itable.


Pas­sen­ger terminal buld­ing of KIAL un­der con­struc­tion in Kan­nur

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