Only 7% of routes under RCS-UDAN scheme sustainable beyond 3-year concession period: CAG

The CAG report also presented 16 recommendations to enhance the scheme's implementation in the future.

Only 54 routes or 7 percent of all awarded routes under the government's ambitious regional connectivity scheme (RCS), Ude Desh Ka Aam Nagrik (UDAN) have managed to sustain operations beyond the three-year concession period, the Comptroller and Auditor General (CAG) said in a report.

In its latest report on the Ministry of Civil Aviation's RCS-UDAN scheme, the auditor general pointed out that 52 percent (403 out of 774 routes) of the awarded routes were unable to commence operations.

"Out of the 371 commenced routes, only 112 routes (30 percent) successfully completed the full concession period of three years," the CAG said in its report.

Of the 112 routes only 54 routes managed to sustain operations beyond the three-year concession period as of March 2023, the report added.

As on February 9, 2023, after four rounds of bidding under UDAN, 467 routes have commenced, operationalising 70 airports, including two water aerodromes and nine heliports, the MoCA has said in a written reply to the Parliament.

The report comes at a time when, the government's RCS-UDAN scheme has failed to catch the eye of travellers during the first quarter of the financial year 2023-24 (Q1FY24), the busiest travel period in India’s aviation history.

Only 5.5 lakh passengers took to the air under the RCS-UDAN scheme during April-June 2023-24. During this time, domestic carriers in the country carried around 3.86 crore passengers, as per government data seen by Moneycontrol.

The number of fliers in the UDAN scheme in Q1FY24 was marginally higher than the 5.2 lakh passengers in the corresponding period of the previous year.

The mediocre air traffic numbers of the RCS-UDAN scheme also come at a time when the government has doubled the funding under the scheme in the Budget for 2023-24.

In the Budget for 2023-24, Finance Minister Nirmala Sitharaman earmarked Rs 1,244.07 crore for the scheme, up from Rs 600.71 crore (BE FY23) and a revised estimate of Rs 1,078.81 crore.

The CAG report also presented 16 recommendations to enhance the scheme's implementation in the future.

The report recommended devising a suitable mechanism to assess route feasibility for sustainable long-term operations and identifying unserved/underserved airports, taking into account factors such as stage length, alternative transportation options, terrain, socioeconomic conditions, and tourism potential.

It also pointed out that the Ministry of Civil Aviation and the Airport Authority of India did not undertake an exercise to identify potentially eligible heliports.

"Most of the heliports identified for operations based on helicopter operators' proposals either remained unutilised/underutilised or saw discontinued RCS operations," the audit report stated.

Regarding the collection and remittance mechanism of the Regional Air Connectivity Fund (RCF) levy, the audit report criticised the absence of clear rules.

It suggested the ministry establish a monitoring mechanism to ensure that collected RCF levy from passengers does not exceed the amount to be remitted to the government or become a profit source for airlines.

Additionally, the report pointed out delays in remitting dues by airline operators and recommended introducing penalties for such delays according to the Draft Standard Operating Procedure.

The auditor general also asked the MoCA to come up with a suitable mechanism to reconcile the viability gap funding (VGF) claims lodged by the airlines from the flight data available with Airport operators instead of disbursing the VGF on a self-certification basis.

It also asked MoCA to revamp the system of booking seats on flights under the UDAN scheme.

"The system of booking of seats on RCS routes needs to be revamped to ensure that airline operators do not charge airfare more than the airfare cap as stipulated in the Scheme," the CAG said in its report.

The report also highlighted significant delays in the revival/development of identified RCS airports, despite budgetary support sanctioned by the Cabinet Committee on Economic Affairs in March 2017.

"Out of the 116 airports/heliports/water aerodromes where expenditure was incurred, operations commenced at only 71 (61 per cent), while operations could not begin or were discontinued at 83 airports/heliports/water aerodromes despite an expenditure of Rs 1,089 crore," the report noted.

Furthermore, the CAG report asked airlines to develop a transparent system of booking seats on RCS flights which should be monitored by MoCA to ensure that seats under the UDAN scheme are sold on priority against seats not covered by the scheme.

The CAG also called for the audit of Regional Air Connectivity Fund Trust accounts, while pointing out that an amount of Rs 600 crore was lying ideal in the Regional Air Connectivity Fund Trust account from December 2017 to March 2022.

The CAG also said that MoCA after six years of operating the scheme should now come up with a better mechanism for the identification of airports for revival/development, in the light of experience gained.

Pointing to examples of delays and the award of routes under UDAN without the proper infrastructure, the CAG report pointed out that there were delays of four to 54 months in preparing the Detailed Project Reports (DPR) in respect of 30 helipads/heliports.

CAG also said that 83 routes connecting 31 helipads/heliports were awarded to the four helicopter operators — Pawan Hans Limited, Heritage, Heligo and Sky One — in January 2018, but the helipads/heliports for which the routes were awarded were not ready to commence operations.

The auditor also said that in order for the airlines to operate from RCS airports, the stipulation to obtain additional performance guarantees should be adhered to in true spirit.

It pointed out that until April 2023 there was no penal clause under routes awarded under the UDAN scheme

The CAG also called for an audit of the performance of airlines operating on routes under the UDAN scheme.

Earlier this year, a Parliamentary Standing Committee also took note of the dwindling numbers under the RCS-UDAN scheme and has sought an explanation from MoCA.

It also noted that as per the Output Outcome Monitoring Framework for 2022-23 (till December 31, 2022), the Ministry has not been able to achieve the targets in most cases, with achievements in the range of 40 percent to 67 percent only.

"The Committee notes the low performance of the Ministry on almost all the constituents of the RCS-UDAN Scheme, except one. The Committee hopes that with the increased allocation, the Ministry would do meticulous planning to ensure full utilisation of funds and achievement of targets," the Committee had said in its report.

UDAN, a regional airport development program under the Centre’s regional connectivity scheme, is aimed at refurbishing under-served airports to make air travel affordable.

The scheme was initiated on 21 October 2016 with the objective to fulfil the aspirations of people, with enhanced aviation infrastructure and air connectivity in tier II and tier III cities.

The UDAN scheme is applicable for a period of 10 years from the date of its notification. The Union government has set a target of operationalising 1,000 UDAN routes and reviving/developing 100 unserved and underserved airports/heliports/water aerodromes by 2024.