Fraught with limitations

The government is moving ahead with the next phase of the regional air connectivity scheme, inviting bids from interested players for new routes and granting them. The reaction looks promising with over 100 bids received from several small and most of the major airlines. The routes include those involving seaplanes, helicopters and small aircraft which can carry only about 20 passengers. Around 370 routes are being granted under the UDAN (Ude Desh ka Aam Nagarik) 4.2 scheme, of which about 100 would be catered to by seaplanes, 60 by helicopters and the rest by fixed-wing aircraft. Since the UDAN scheme — aimed at ensuring last-mile connectivity — was launched in 2016, the Airports Authority of India (AAI) has awarded 954 valid routes in four rounds of regional connectivity scheme (RCS) bidding, out of which 425 routes have commenced operation till now, the Lok Sabha was informed by the Civil Aviation Ministry on July 22. The House was also informed that the government has so far disbursed Rs 1,914 crore from the Regional Air Connectivity Fund Trust (RACFT) as Viability Gap Funding (VGF) to selected airline operators under the UDAN regional connectivity scheme.

The experience so far has shown that a large chunk of routes given away under the UDAN scheme are not being served by any airline. As per official documents, there are a total of 273 airports or airstrips which are still unserved or underserved. Many of them are being maintained by AAI, even though flights are not being operated. While the regional connectivity scheme was launched by the erstwhile Manmohan Singh government, it was renamed UDAN by the BJP-led government after it came to power in 2014. Under the Modi regime's first phase of the UDAN scheme, 128 routes were awarded in December 2016, of which only 54 could be operationalised. At many of these airports/airstrips, operations were stopped soon after they were launched. In reply to a question in Rajya Sabha on July 25, the Ministry of Civil Aviation said a total of 115 RCS helicopter routes have been awarded under RCS-UDAN scheme, of which only 36 routes have been operationalised. Under UDAN 2.0 in August 2017, 254 routes were given, but flights could be launched only from 106. Under UDAN 3.0 and 3.1 (October 2018 and February 2019), 335 routes were awarded but only 88 were operationalised. UDAN 4.0 was launched in December 2019, but data is still unavailable while UDAN 4.2 was launched last week. Earlier, the government had acknowledged in the Parliament that only one-fourth of the air routes granted under the RCS-UDAN scheme have become operational. Flights have commenced so far on merely 186 out of 705 RCS routes the airline operators have been offered so far, it said.

The government also informed the Parliament on July 25 that it had awarded 14 water aerodromes under the UDAN scheme, with the Airports Authority of India (AAI) having so far spent about Rs 19 crore out of Rs 287 crore sanctioned for water aerodromes. On the helicopter operations front, the Rajya Sabha was informed that a total of 115 RCS helicopter routes were awarded under the RCS-UDAN scheme, of which only 36 routes have been operationalised.

The question is why aren't the airline companies or helicopter or seaplane operators coming forward to operate on the UDAN routes which are meant for connecting the remote regions to large cities of the country by air. These routes are not just meant for travel but could also be used for transporting. A large chunk of these routes is socially important but uneconomic. So, the public-sector AAI has been regularly directed by the government to build and maintain airports and relevant facilities like air traffic control at such places, and it has been spending hundreds of crores of rupees on them. But these facilities remain unused as no aircraft flies there. The Centre's viability gap funding (VGF) scheme — which is administered by the Ministry of Finance and provides financial support in the form of one-time or deferred grants to build infrastructure projects undertaken through PPP mode — has also not been attractive enough for airline operators.

The question then arises is why is the AAI being forced to spend so much for the upkeep of such airports. Simply put, the revival or survival of airstrips or airports is demand driven and there is a lack of demand at these airports or airstrips. An airport's success also depends on a firm commitment from airline operators to fly, as well as the central or state governments to provide various concessions, including land, to attract the air carriers. As per the latest figures available, the government ran up a bill of Rs 35.67 crore in 2018-19 for the upkeep of 27 'ghost' airports from where no flights take off. An RTI query revealed that these 27 are among a total of 31 non-operational airports in the country. There are another 15 airports that are operational, but no scheduled flights operate from there. The AAI manages 136 airports/civil enclaves but technically only 90 of them are operational, according to a reply to the RTI in August 2019. These 27 non-operational airports were built at a cost of Rs 40.69 crore. Even though non-operational airports do not handle flights, they need to be maintained, their staff paid and depreciation accounted for. The government had then said that efforts were on to make nine of the 31 non-operational airports functional at the earliest.

The issue is how can the Indian airlines be attracted to launch operations from such Tier-II and Tier-III destinations and how best can the airports do this job. Experts say the airline companies have to take a call on launching new routes they wish to operate. They decide this by estimating whether there would be enough passengers who are willing to pay a sufficient price for the flights. However, the ticket prices are capped by the government at Rs 2,500. In recent years, airports across the globe have become active participants in the aviation equation by engaging with the airlines at the network planning level and holding discussions with local business and tourism interests, besides offering incentives for the launch of new air services. In the Indian context, it would also have to be seen whether Indian carriers have the necessary smaller or narrow-body aircraft to operate on the smaller and regional routes.

Following up on the Modi government's 2019 plan to develop, modernise and upgrade other airports, AAI has projected an investment of over Rs 17,500 crore over the next five years. This is significant as the government wishes to add 100 new airports for one billion fliers by 2035. Notably, development of airports requires massive capital investment. What is crucial to be kept in mind is that airports need to be developed first and foremost as a catalyst for economic development. That means putting the needs of aviation in the front and the centre. Developing airports as real estate businesses is doomed to fail.

Views expressed are personal