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Avation Background Paper.Cdr Regional Connectivity Scheme (RCS) for Civil Aviation Roadmap for sustainable operations Knowledge Partner Regional Connectivity Scheme (RCS) for Civil Aviation Roadmap for sustainable operations Knowledge Partner Regional Connectivity Scheme (RCS) for Civil Aviation Roadmap for sustainable operations Knowledge Partner MESSAGE MESSAGE MESSAGE MESSAGE MESSAGE I am happy to share with you the FICCI-KPMG 'Report on Regional Connecvity Scheme (RCS) for Civil Aviaon Roadmap for sustainable operaons' to be released at the Aviaon Summit jointly organized by Ministry of Civil Aviaon, GoI, Government of Andhra Pradesh and FICCI. Air connecvity has a catalyc impact on regional development, investments, tourism and job creaon which can influence State economies significantly. Government launched an ambious Regional Connecvity Scheme-UDAN (acronym for 'ude desh ka aam nagrik') for providing connecvity to un-served and under-served airports of the country. This first-of- its-kind scheme globally will create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man even in small towns. In virtue of this, FICCI-KPMG has prepared a 'Report on Regional Connecvity Scheme (RCS) for Civil Aviaon Roadmap for sustainable operaons'. The objecve of this report is to study the RCS guidelines, idenfy potenal RCS airports and desnaons thereof; develop financial models for four aircra types and propose improvements in the policy, regulatory and procedural aspects of the scheme. This FICCI-KPMG report has idenfied 44 high potenal RCS airports from among 414 airfields available in India. This is based on various techno-commercial parameters with valuable support from MoCA and AAI. The report has presented over 370 possible desnaons from the high-potenal RCS airports, the projected financial statements for four aircra types and suggesons for further improvement of the scheme. I hope you will find this report useful and as always, your suggesons and feedback are welcome. Dr. A. Didar Singh Secretary General FICCI MESSAGE I am happy to share with you the FICCI-KPMG 'Report on Regional Connecvity Scheme (RCS) for Civil Aviaon Roadmap for sustainable operaons' to be released at the Aviaon Summit jointly organized by Ministry of Civil Aviaon, GoI, Government of Andhra Pradesh and FICCI. Air connecvity has a catalyc impact on regional development, investments, tourism and job creaon which can influence State economies significantly. Government launched an ambious Regional Connecvity Scheme-UDAN (acronym for 'ude desh ka aam nagrik') for providing connecvity to un-served and under-served airports of the country. This first-of- its-kind scheme globally will create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man even in small towns. In virtue of this, FICCI-KPMG has prepared a 'Report on Regional Connecvity Scheme (RCS) for Civil Aviaon Roadmap for sustainable operaons'. The objecve of this report is to study the RCS guidelines, idenfy potenal RCS airports and desnaons thereof; develop financial models for four aircra types and propose improvements in the policy, regulatory and procedural aspects of the scheme. This FICCI-KPMG report has idenfied 44 high potenal RCS airports from among 414 airfields available in India. This is based on various techno-commercial parameters with valuable support from MoCA and AAI. The report has presented over 370 possible desnaons from the high-potenal RCS airports, the projected financial statements for four aircra types and suggesons for further improvement of the scheme. I hope you will find this report useful and as always, your suggesons and feedback are welcome. Dr. A. Didar Singh Secretary General FICCI Disclaimer 1. This document has been prepared for the public domain, suitable assumptions Federation of Indian Chambers of were made to extrapolate values for the Commerce and Industry (“FICCI”) as per same. the Letter of Engagement between FICCI 4. We emphasize that the realization of the and KPMG advisory Services Private prospective nancial information set out Limited (“KPMG”) and General Terms of within our report (based on secondary Business dated 10 November 2016. sources, as well as our internal analysis), is 2. This document contains KPMG's analysis dependent on the continuing validity of of secondary sources of published the assumptions on which it is based. The information and incorporates the inputs assumptions will need to be reviewed and gathered through meetings with industry revised to reect such changes in business sources, which for reasons of trends, cost structures or the direction of condentiality, cannot be quoted in this the business as further clarity emerges. We Contents document. While information obtained accept no responsibility for the realization from the public domain has not been of the prospective nancial information. veried for authenticity, we have obtained 5. Our inferences therefore will not and I. Background . 1 information, as far as possible, from cannot be directed to provide any sources generally considered to be assurance about the achievability of the reliable. projections. Since the projections relate to II. Identication of potential RCS Airports . 5 3. KPMG's analysis is based on the prevailing the future, actual results are likely to be market conditions and regulatory different from those shown in the III. Financial viability assessment of RCS operations . 31 environment and any change may impact prospective nancial information because the outcome of our report. Wherever our events and circumstances frequently do report makes reference to 'KPMG Analysis', not occur as expected, and differences IV. Suggestions for policy and regulatory improvements . 39 it indicates that we have undertaken may be material. Any advice, opinion and/ certain analytical activities on the or recommendation indicated in this underlying data to arrive at the document shall not amount to any form of V. Conclusion. 45 information presented; we do not accept guarantee that FICCI and/or KPMG have responsibility for the underlying data. determined and/ or predicted future Wherever information was not available in events or circumstances. About FICCI . 47 About KPMG . 47 Disclaimer 1. This document has been prepared for the public domain, suitable assumptions Federation of Indian Chambers of were made to extrapolate values for the Commerce and Industry (“FICCI”) as per same. the Letter of Engagement between FICCI 4. We emphasize that the realization of the and KPMG advisory Services Private prospective nancial information set out Limited (“KPMG”) and General Terms of within our report (based on secondary Business dated 10 November 2016. sources, as well as our internal analysis), is 2. This document contains KPMG's analysis dependent on the continuing validity of of secondary sources of published the assumptions on which it is based. The information and incorporates the inputs assumptions will need to be reviewed and gathered through meetings with industry revised to reect such changes in business sources, which for reasons of trends, cost structures or the direction of condentiality, cannot be quoted in this the business as further clarity emerges. We Contents document. While information obtained accept no responsibility for the realization from the public domain has not been of the prospective nancial information. veried for authenticity, we have obtained 5. Our inferences therefore will not and I. Background . 1 information, as far as possible, from cannot be directed to provide any sources generally considered to be assurance about the achievability of the reliable. projections. Since the projections relate to II. Identication of potential RCS Airports . 5 3. KPMG's analysis is based on the prevailing the future, actual results are likely to be market conditions and regulatory different from those shown in the III. Financial viability assessment of RCS operations . 31 environment and any change may impact prospective nancial information because the outcome of our report. Wherever our events and circumstances frequently do report makes reference to 'KPMG Analysis', not occur as expected, and differences IV. Suggestions for policy and regulatory improvements . 39 it indicates that we have undertaken may be material. Any advice, opinion and/ certain analytical activities on the or recommendation indicated in this underlying data to arrive at the document shall not amount to any form of V. Conclusion. 45 information presented; we do not accept guarantee that FICCI and/or KPMG have responsibility for the underlying data. determined and/ or predicted future Wherever information was not available in events or circumstances. About FICCI . 47 About KPMG . 47 I Background 1 I Background 1 d) The VGF shall be for 50% of the passenger seats in an RCS ight, subject to a Background limit of 40 and 13 seats in xed-wing and rotary-wing aircraft respectively. In case of 9-seater xed-wing and 5-seater rotary wing aircraft, all seats shall be covered under RCS. e) RCS operators shall get a three year exclusivity on the routes allocated to them after a transparent competitive bid. f) Union and state government shall provide the RCS subsidy in the 80:20 ratio except for the North East where the ratio shall be 90:10. g) Airports Authority of India (AAI) shall be the operating agency for the scheme. The objective of the FICCI-KPMG report is to study the RCS guidelines, identify potential RCS airports and destinations thereof; develop nancial models for four aircraft types and propose improvements in the policy, regulatory and procedural aspects of the scheme. India's Regional Connectivity Scheme ('RCS', 'the scheme') was introduced as part of the National Civil Aviation Policy ('NCAP 2016') in June 2016 and was formally launched in October 2016. The scheme provides a unique opportunity to take ying to the masses by way of scal incentives, infrastructure support, procedural simplications and monetary subsidies. The highlights of RCS are as follows: a) Target airports include over 400 unserved and under-served airelds/ aerodromes. b) The scheme is market-driven.
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