CAG’s Compliance Audit Report No.22 of 2023 on “Regional Connectivity Scheme-UDAN (Ude Desh Ka Aam Naagrik)” was presented in the Parliament on 10 Aug 2023. The report being critical of achievements in some sections has embedded positives that must be acknowledged along with ‘intent’ of this scheme. Presented herein the first part is minimal background and framework of the scheme, followed by selected observations of CAG’s report seen relevant to subject title. Stated observations should assist narrowing down to the core subject of Indian helicopter sector. Ibid layout should facilitate reader’s perspective about what went right and what could have been dealt differently to promote helicopter operations under UDAN. Challenges, recommendations and justifications are then put forth to help the larger cause of growth for Indian helicopter industry in immediate future.

Background
Development of aviation sector has a multiplier effect on the economy. As per an ICAO study – “Economic benefits of civil aviation: ripples of prosperity”, the output and employment multipliers of aviation are 3.25 and 6.10 respectively. This implies that every INR 100 spent on air transport contributes to INR 325 worth of benefits; and every 100 direct jobs generated in air transport sector result in 610 jobs generated in the rest of the economy. In fact, the study attributes over 4.5% of the global Gross Domestic Product (GDP) to civil air transport.

National Civil Aviation Policy (NCAP), 2016 envisaged Regional Connectivity Scheme (RCS) to enhance regional air connectivity through fiscal support and infrastructure development. Regional Connectivity Scheme (RCS)-UDAN was thus introduced by Ministry of Civil Aviation (MoCA) to promote regional air connectivity through affordability for enlarging aviation footprint in India.

The central idea was to encourage airlines on regional and remote routes via enabling policies and incentives. Proposals to provide connectivity to underserved/ unserved airports were called for from airlines in October 2016 for the first time. First UDAN flight was launched by the Prime Minister on 27th April, 2017 between Shimla to Delhi. Different versions of the scheme since then have been released periodically with the latest, eleventh (11th) version disseminated in July 2023. (RCS Udan version 5.2).

Under UDAN-2, focus was extended to hilly areas, North Eastern and island regions for connectivity. Remote areas impracticalto be reached by fixed-wing aircrafts were considered for helicopter operations. In April 2023, under UDAN 5.0,MoCA released a list of heliports from where operations under the scheme were intended.

Framework of the Scheme
The scheme operates at three levels:
• Reduction of operational costs on regional routes.
• Providing a market-discovered subsidy for some seats on RCS routes.
• Providing a three-year exclusivity period to airline operators for initial business viability.

Since airline operators were deemed best to determine routes/networks for integration with existing operations, they were to propose regional routes and seek VGF*, if any. A list of unserved and underserved airports was made available to prospective bidders. Based on a competitive bidding process, operators were awarded limited duration exclusive right to operate on RCS routes. Post this three-year exclusive period, when a route was expected to become self-sustainable/market linked, the VGF support was planned to be withdrawn.

*VGF. (Viability Gap Funding) ‘Viability Gap Funding or VGF’ shall mean the financial support provided to the Selected Airline Operator for operation of RCS Flight(s) from the Regional Connectivity Fund pursuant to this Scheme. (RCS, GoI, MoCA, version 5.2, July 2023)
Selected airline operator had to provide 50% of flight capacity as RCS Seats (minimum of 9 and a maximum of 40) for operations through fixed wing aircraft, but all passenger seats up to 13 as RCS Seats for operations through helicopters.

Airfares on seats for VGF consideration was based on costs from actual industry data on various types of aircraft operating on different route lengths.Remaining 50% of flight capacity (non-RCS seats) was permitted to be sold by airlines at market-determined prices. This provided an opportunity to airlines for experimenting with airfares and market development.
In addition to VGF, concessions from Central govt, state govt and airport operators were finalised. Further, a budgetary support of ₹ 4,500 crore was approved (March 2017) by the Cabinet Committee on Economic Affairs.

Airports Authority of India (AAI) is the designated nodal agency for implementation of scheme. Development of Helipads/Heliports and water aerodromes was included as per the revised Cabinet Committee on Economic Affairs approval (March 2019) and M/s Pawan Hans Limited was appointed as Nodal Agency by MoCA for providing consultancy for development of all heliports covered under RCS.

Extracted Findings of CAG’s Compliance Audit Report No.22 of 2023

(Note: – Up to March 2021, three rounds of bidding for UDAN 1, 2 and 3 were completed and the same were covered under audit)

1. The Scheme is a good initiative for increasing air connectivity as a faster, safer and affordable option of travel for common people, with eco-multiplier effect. ……. However, the implementation of RCS needs to be improved in the light of audit observations made in the Report, to fully leverage the benefits envisaged.[Executive summary of the report].

2. Upto UDAN-3, 52 per cent (403 out of 774 routes) of the awarded routes could not commence operations and from the 371 commenced routes, only 112 routes (30 per cent) completed the full concession period of three years. Further, out of these 112 routes, only 54 routes (i.e., 7 per cent of the awarded routes) connecting 17 RCS Airports could sustain the operations beyond the concession period of three years, as of March 2023. [Refers to Para 3.1.1 of Report]

3. There was no exercise carried out by MoCA/ AAI to identify eligible heliports on the basis of its potential. The majority of heliports identified for operations from the proposals submitted by helicopter operators either remained un-utilised/under-utilised, or RCS operations from such heliports were discontinued subsequently. [Refers to Para 3.1.3 of report]

4. There were delays on the part of M/s RITES and Pawan Hans Limited besides other reasons as stated by MoCA and abnormally high consultancy charges were charged by the Nodal agency i.e., M/s Pawan Hans Limited.[Refers to Para 5.1.2 (i) of report]

Notes on “Delays in preparation of Detailed Project Reports”.

a) As most of the helipads/ heliports were not ready to commence operations or were not fulfilling the requirements for Directorate General of Civil Aviation licensing, MoCA appointed (February 2018) Pawan Hans Limited, a Central Government Public Sector Undertaking, as the Nodal Agency for development of all Helipads covered under RCS UDAN-2 to facilitate their compliance with the regulatory requirements covering licensing and security aspects.

b) …. Subsequently, Pawan Hans Limited awarded (May 2018) the contract to M/s RITES Ltd for Rs. 8.25 crore for preparation of Detailed Project Reports and Project Management & Consultancy services for development of heliports in five states ……on nomination basis i.e., without calling of tenders citing ‘urgency of work’ in view of implementation of RCS scheme notified by MoCA.

c) Audit observed that not a single Detailed Project Report was prepared by M/s RITES Limited/ Pawan Hans Limited up to November 2018. Thus, the delay in execution of work defeated the very purpose for the work which was awarded on nomination basis. …. Detailed Project Reports in respect of 30 helipads/ heliports could be prepared only during December 2018 to February 2023 i.e., with delay of four to 54 months.

d) Audit further observed that M/s Pawan Hans Limited paid to M/s RITES for preparation of Detailed Project Reports of helipads/ heliports at the rate of Rs.27.50 lakh per heliport/helipad whereas, in turn, Pawan Hans Limited charged a sum of Rs.40 lakh per heliport/helipad from the AAI. Thus, Pawan Hans Limited was found to be charging an extra amount of Rs.12.50 lakh i.e., 45.45 percent over and above the amount paid to M/s RITES. The consultancy charges being levied by Pawan Hans Limited was abnormally high especially in reference to the MoCA order dated 15 November 2016 that allowed only 5 per cent administrative charges to the implementing agency i.e., AAI.

5. Based on responses received against the notice inviting e-Proposal, ‘Letter of Award’ for 83 routes connecting 31 helipads/heliports were awarded to four (04) helicopter operators (Pawan Hans Limited, Heritage, Heligo and Sky one) in January 2018. [Refers to Para 5.1.2 (ii) of report]

6. The helicopter routes were awarded by MoCA without undertaking the basic task of ascertaining the extent of preparedness of the heliports. Consequently, even after a lapse of five years, most of the heliports (70 per cent) awarded under the RCS scheme could not be operationalised…….Revival/ upgradation of these 21 heliports out of 30 heliports involving expenditure to the tune of Rs.62 crore could not be completed even after lapse of 4 years 9 months after stipulated completion date of July 2018.[Refers to Para 5.1.2 (ii) of report]

7. Out of the 56 routes awarded to Pawan Hans Limited, it could commence operations on 30 routes (54 per cent) only, whereas M/s Heritage was awarded eight routes, out of which it could commence operations at four routes (50 per cent) only till March 2023. [Refers to Para 5.1.2 (v) of report]

a) Pawan Hans Limited. It was further noticed that in absence of any deterrent clause in the agreement, there were several instances where no passenger actually flew on a particular route to and fro but still the Selected Airline Operator had operated empty flights on that route. Out of 4,313 flights, during January 2020 to March 2023 the total number of such ‘zero-passenger’ to and fro flights/journeys was 780 i.e., 18 per cent of all the flights. The VGF paid for such flights i.e., without any passengers amounted to Rs.5.31 crore, which was wasteful expenditure.
b) Heritage. The occupancy (load factor) was nearly 45 per cent. Out of the 238 flights, the total no. of ‘zero-passenger’ to and fro flights/trips were four during the period from January 2020 to March 2023.

Opinion and Recommendations
A. Inclusion of helicopter operations under the scheme has been framed on aeroplane-like operations from airports. Route-lengths considered in chart below serve as feeder routes for longer segments. Red-boxed marked segment in the chart is typical case for helicopters. In this case, operations commenced only on 28% of selected routes and had an average load factor of 38%.

Source: – CAG report on UDAN

It is notable that after lapse of three-year award period, continued operations on routes varies from 2.12% in the first segment of ‘Up to 200 km’, to 4.62% in ‘201 km to 400 km’ segment, and 8.68% in ‘above 400km’ segment. Route-based framework possibly workable for aeroplanes on long routes, is empirically found unsuited for smaller segments; specifically in the core capability area of helicopter operations (‘Up to 200 km’).

Philosophy of helicopter operations must therefore be adopted differently for desired results. Performance improvements in helicopter operations are nevertheless feasible through the scheme’s ‘demand-driven’ principle. Generating demand from end consumers in aviation domain is primarily dependent on reliability of service and flight safety. A solution for RCS-helicopter operations shaped in existing ecosystem therefore needs coupling with day/night, all weather operations under IFR (Instrument Flight Rules: IFR).

It is recognised that current limits of fair weather and day-time helicopter operations offer very limited dependability to economically capable consumers of helicopter services. In absence of reliability, even the premium fare capable passengers are forced to undertake alternative road/rail travel with penalty of time and ease of travel.

Prevalent fixed-charge (monthly) arrangement, is the baseline framework proposed for pragmatic RCS-helicopter operations. Arrangements between government bodies and operators to facilitate hired helicopters for general public service already exists, albeit with some variance. An ‘On-demand’ transfer between heliports under IFR is a capability awaiting to be capitalised in helicopter domain. Such heliports have limited real-estate requirements with feasibility of functioning at a fraction of cost compared to an airport. This small-step conservative approach also serves as a real-time check of local passenger traffic before large investment for a proposed airport is made. Time-tested commercial arrangements and contemporary technology together are thus competent to support short distance regional connectivity for a progressive, cost-effective option by helicopters.

Notes: – An overview of proposed helicopter operations capable of undertaking day/night flights from heliports may be required for the readers. Termed as Point-in-space (PinS) procedures, these procedures have been specifically developed for helicopters by ICAO (International Civil Aviation Organisation). Here, helicopters employ satellites’ signals for landing and take-off operations from heliport, similar to aeroplane operations from an airport. Such operations are feasible in the remotest corners since principled on satellite signals. The most significant part is the identical safety of helicopter operations so far practical only for aeroplanes at airports.

Since ‘PinS’ procedures would employ signals from ISRO’s GAGAN satellites, it is an opportunity for MoCA to deploy an indigenously built capability for the first time incountry towards helicopter specific operations. Presence of capable helicopters and ready regulations permit an immediate realisation of such heliports in India. Development of such heliports by AAI is however, awaited.

B. RCS scheme depends on airline operators for selection of operational routes. For helicopters, an inclusive group of SMEs and operators could be consulted for selection of heliports. Heliport development phase should be realised through a limited pilot-project in volunteering states. Once the infrastructure is in place, operators should then be invited to bid for connecting identified airports/heliports. This outline differs from route-based context of present scheme which proved to be unsuitable for short distances. Lessons from pilot-projects may then be incorporated for countrywide operations.

It is highly possible that AAI (Airport Authority of India) may be unable to assign desired priority to heliport development owing to its limited resources. One-time approvals for heliport and procedure design through foreign agencies must be considered for a reasonable time implementation under the oversight of DGCA.

C. Once implemented, operators’ performance must be assessed by helicopter availability vis-à-vis demand, and safety of operations. Passenger bookings could be envisioned through a specialist online service monitored for fair transactions and timely aircraft movements.
Conclusion

Helicopter operations occupy a unique space in aviation operations that spans in the airspace ‘ahead’ of established airports. Legacy helicopter operations have thus been limited to daylight and fair weather; a window that offers limited travel reliability and weighs against safety. Exclusive nature of helicopter operations and contemporary heliport capabilities under IFR (employing PinS procedures) must be amalgamated fora sustainable regional connectivity, dependable service and above all, safety of commuters.

References and Extracts: –
1. CAG’s Compliance Audit Report No.22 of 2023 on “Regional Connectivity Scheme-UDAN (Ude Desh Ka Aam Naagrik)”. (https://cag.gov.in/en/audit-report/details/119178)
2. UDAN Manual released by Ministry of Civil Aviation, November 2021.
3. Press release by The Comptroller and Auditor General of India no SS/TT/74-23, dated 10 Aug 2023.
4. Regional Connectivity Scheme (RCS or the Scheme), Ministry of Civil Aviation, Government of India, Version 5.0 – Apr 2023
5. Regional Connectivity Scheme (RCS or the Scheme), Ministry of Civil Aviation, Government of India, Version 5.2 – July 2023

About The Author:
Capt Peeush Kumar is a certified Type Rating Examiner (TRE) on H145 Helicopter working with a Mumbai based operator. He is a qualified Experimental Test Pilot (Rotary Wing) and an active author for various aviation periodicals. He has been in pursuit of implementing PBN (Performance Based Navigation) procedures for helicopters for past three years with encouraging support from Rotary Wing Society of India (RWSI). (Views expressed are personal )