Compliance Audit on Regional Connectivity Scheme — UDAN, Ministry of Civil Aviation

Findings

1. Of 774 routes awarded up to UDAN-3, 403 — 52 per cent — never began operating. Of the 371 that did, only 112 completed the full three-year concession period, and only 54 — seven per cent of all awarded routes — were still operating beyond it as of March 2023.

   “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.”Executive Summary

2. Of 116 airports, heliports and water aerodromes where money was spent on revival, operations began at only 71. At 83 of them operations either never began or were discontinued, after ₹1,089 crore had been spent.

   “Significant delays were observed in revival/ development of identified RCS airports out of the budgetary support sanctioned by 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) airports/ heliports/ water aerodromes. Operations could not be commenced or were discontinued at 83 airports/heliports/water aerodromes even after incurring an expenditure of ₹ 1,089 crore.”Executive Summary

3. Passengers on scheme routes rose from 2.63 lakh in 2017-18 to 24.97 lakh in 2022-23, and the audit calls the scheme a good initiative with the potential to aid economic development, tourism and emergency preparedness in unserved areas.

   “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… The response to the Scheme was positive as number of passengers travelled on RCS routes increased from 2.63 lakh in 2017-18 to 24.97 lakh in 2022-23. However, the implementation of RCS needs to be improved in the light of audit observations made in the Report.”Executive Summary

4. No exercise was carried out to identify eligible heliports on the basis of potential; most heliports taken up on operators' own proposals stayed unused or under-used, or their operations were later discontinued.

   “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.”Executive Summary

5. Viability gap funding was disbursed on the airlines' own self-certification, which the audit links directly to excess disbursement and breaches of the scheme's fare cap.

   “The decision of Regional Connectivity Advisory Board to accept VGF claims by AAI on self-certification basis resulted in non-compliance to various provisions of the scheme. Consequently, instances of violation of RCS norms, viz., excess disbursement of VGF, violation of RCS fare cap, etc., were noticed by Audit.”Executive Summary

6. The ministry framed no rules to regulate collection and remittance of the Regional Air Connectivity Fund levy that funds the scheme, and the fund trust's accounts had not been submitted for CAG audit since inception.

   “MoCA did not frame any rules to regulate the collection and remittance mechanism of Regional Air Connectivity Fund levy… For accounting of transactions of Regional Air Connectivity Fund, Standard Operating Procedure (SoP) as per laid down procedure of CAG of India was not formulated even after a lapse of more than five years. Further, the accounts of Regional Air Connectivity Fund Trust (since inception) were also not submitted for CAG audit.”Executive Summary

7. For helicopter routes, viability gap funding and the fare cap were both computed on the flight time stated in the letter of award rather than the actual time flown, so fares charged and funding paid were higher than they should have been.

   “For the helicopter operations, the airfare cap and VGF cap was based on flight duration. But while disbursing the VGF, instead of actual time of travel, the time as per letter of award was considered. Consequently, airfare charged as well as VGF disbursed was higher than required to be charged/reimbursed considering the actual time of travel.”Executive Summary

Fact-checks citing this report

• ◑Lacks contextWe shall modernize existing and operational Airports, and build new ones especially connecting smaller towns and all tourism circuits.