The Airports Authority of India (AAI), the implementing agency for the Regional Connectivity Scheme (RCS) UDAN (which stands for Ude Desh ka Aam Nagrik - the common man will fly) has received 45 initial proposals from 11 bidders covering more than 200 RCS routes as the deadline for submitting initial proposals came to an end on January 16, 2017.

These initial proposals cover as many as 65 airports, of which there are 52 unserved and 13 underserved airports as per the provisions of the scheme. Counter-bids have now been invited against these initial proposals, the last date of submission for which is February 1, 2017. The routes or networks will be awarded to the bidders who quote the lowest requirement of Viability Gap Funding (VGF) against such routes. To ensure that operations on ground start with minimum time-gap after the bidding is completed, parallel action has also been initiated by the Ministry of Civil Aviation with AAI, state governments, the Directorate General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS).

It may be recalled that with the twin objectives of promoting balanced regional growth and making flying affordable for masses, the Ministry had launched the Regional Connectivity Scheme UDAN on October 21, 2016. The scheme was a key component of the National Civil Aviation Policy which was released earlier by the Ministry on June 15, 2016. The scheme, which would be in operation for a period of 10 years, envisages providing connectivity to unserved and underserved regions of the country through revival of existing air-strips and airports. This would be achieved through a financial stimulus in the form of Central and state government concessions, as well as VGF to the interested airlines to kick-off operations from such airports, so that the passenger fares are kept affordable. The fare for a one hour journey of approximately 500 km on a fixed-wing aircraft or for a 30 minute journey on a helicopter would be capped at Rs. 2,500 under the scheme, with proportionate pricing for routes of different lengths/duration.

Civil Aviation Minister P. Ashok Gajapathi Raju, while expressing satisfaction with the response received under the scheme, conveyed that this is a significant step ahead in realising the Prime Minister’s vision of ‘connecting the unconnected and serving the unserved’. The scheme is likely to give a major boost to tourism activities and employment generation in Tier-II and Tier-III cities, he added.

To reduce cost of operations, the Centre will provide concessions in the form of reduced excise on value-added tax (VAT), service tax and flexibility in code-sharing at airports under the regional connectivity scheme. The state governments would have to lower the VAT on jet fuel to 1 per cent or less, besides providing security and fire services free of cost and electricity, water and other utilities at substantially concessional rates. Landing and parking charges and terminal navigation landing charges will not be imposed by the airport operator.

First flight in March?

The first flight is likely to take off in March under the government’s ambitious regional connectivity scheme as the award of routes is expected to be finalised by mid-February. Under UDAN, the participating airlines would be extended VGF — that would be jointly funded by the Centre and the state government concerned. Towards VGF, the government has started charging Rs. 8,500 levy per departure of flights on major routes which the mainline airlines have opposed. The issue is yet to be resolved. The Ministry is expected to garner about Rs. 35 crore every month from collecting the levy.

THE SCHEME, WHICH WOULD BE IN OPERATION FOR A PERIOD OF 10 YEARS, ENVISAGES PROVIDING CONNECTIVITY TO UNSERVED AND UNDERSERVED REGIONS OF THE COUNTRY THROUGH REVIVAL OF EXISTING AIRSTRIPS AND AIRPORTS.

As per the Ministry of Civil Aviation, the RCS has set out to encourage eligible airline/helicopter operators having a valid scheduled operator permit (SOP) or a valid air operator certificate (AOC) for scheduled commuter air transport services issued by the Director General of Civil Aviation, to operate RCS flights on RCS routes.

Provision of Air Services

The selected airline operator shall, commencing from the commencement date:

• Schedule and operate commercial flights on the RCS route/RCS network at a weekly frequency set out in Schedule-A. The operator shall utilise the aircraft type set out in Schedule-A and having the seating capacity set out in Schedule-A for the flights. The operator shall reserve on each such flight, the number of RCS seats set out in Schedule-A; and charge passengers flying on RCS seats a maximum fare equal to the Airfare Cap/Maximum Airfare in each case in accordance with the provisions of the Agreement.

The Selected Airline Operator shall first offer and sell RCS seats on each flight and only after selling all the RCS seats on the relevant RCS flight, shall sell any non-RCS seats on such RCS flight. In the event of cancellation of any RCS seat by passengers, the first seat booked subsequent to such cancellation shall be sold as an RCS seat. In the event that the number of cancelled RCS seats exceeds the number of seats sold after such cancellation, such excess RCS seats shall be considered to be sold for the purposes of the Selected Airline Operator’s obligation, provided that if sought by the Implementing Agency, the Selected Airline Operator shall provide to the Authority all the passenger details for such cancelled RCS seats.

The Airfare Cap/Maximum Airfare charged by the Selected Airline Operator shall be inclusive of all taxes, charges or levies of whatever description, and shall not be increased on account of any taxes payable by the selected airline operator, including without limitation, service tax or goods and services tax.

Obligations of Authority

The scheme states that the authority shall undertake, comply with and perform in addition to and not in derogation of its obligations elsewhere set out in the agreement, the following: (a) make payment of VGF to the Selected Airline Operator in accordance with Annex-I of Schedule-A]; and (b) reimburse to the selected airline operator, the component of service tax in the airfare cap, subject to the submission of evidence of payment of such service tax by the selected airline operator to the appropriate government agency in accordance with Applicable Law. The Authority shall reimburse within 30 (thirty) days from the receipt of the aforementioned evidence unless the evidence is not in order in which case the Authority shall notify the airline operator, who shall correct the error to the satisfaction of the Authority, and the Authority shall then reimburse within 30 days thereof.

For details of the Schedule visit @: http://www.aai.aero/public_notices/aaisite_test/RCS-na.jsp