The next 100 million air pax in India

*Like any good government document in India, there would be a ton of acronyms used - so bear with me.

A week ago, I had a chance to visit one of the airports covered under the Regional Connectivity Scheme (RCS) - at Nagarjunasagar in the state of Andhra Pradesh (AP). The state had recently been bifurcated and this had split the Nagarjunasagar area into two parts - one half of the area (which has a dam) is in the state of Telangana and the other half (which has the airport) is in AP. This memo has not reached the Ministry of Civil Aviation (MoCA) yet, which lists the airport under Telangana. Geography and politics notwithstanding, it would be interesting to analyze the utility of the RCS, with respect to this airport. The airport specs are below:

ICAO code: VONS
Lat, long: 16.5426998, 79.3187027
Runway length: 5,050 feet
Orientation: 09/27

The airport is at a distance of 150 km by road - which takes around 3.5 hours to drive from Hyderabad if you're a cautious driver. I can imagine a cabbie doing it in half the time. Which makes one wonder if an airport is at an isochrone of less than 3 hours from another airport, does it really make commercial sense to operate it? Airports under the scheme could be at isochrones of greater than 4 hours from an existing, operational airport.

The RCS proposes viability gap funding (VGF) for 3 years for an operator - post which the VGF will be withdrawn and the airport would either float in its newfound commercial avatar or sink. Now, 3 years is too short a time for a large infrastructure project like an airport to take wing and find its commercial niche. Perhaps the VGF could have been for 5 years.

Nagarjunasagar is known for a dam across the mighty river Krishna. And that's pretty much the sum total of the local non-agricultural economy. The airport is at an isolated stretch of land which is at least 30 minutes by car from the nearest habitation. The airport can accomodate an ATR if it tried hard. Would be ideal for 20 seater fixed wings and for helos. However, the business case for the catchment area is not so promising.

Who would be the users of this airport? Government officials? Rich agricuturalists? Would the traffic be smooth enough for it to sustain once the VGF is turned off after year 3? These are the ponderables for an operator wishing to start ops in these airports. For use cases such as air ambulances, seasonal use (such as for the Pushkaralu pilgrimage which happened recently) and for the local government machinery, this airport would be perfect. Additionally, it might have a business case for for parking private jets whose owners might find parking in Hyderabad too expensive. However, this airport, like most airports proposed under the RCS scheme, may not have a use case for year-long operations.

The good thing about the RCS is that it leaves such decisions to the market - if an operator sees long term viability in a route, he would make a proposal for it. There seems to be a well thought out mechanism for getting counter proposals and deciding on the winning bidder for a route. Would be good to know which would be the implementing agency and how it will interface with the state governments. Some states might propose additional VGF for routes which no commercial operator is interested in.

As I concluded my visit to the air strip, the following thoughts came to my mind:

1. The tranport infra for pax to get to the airport has to be developed concurrent to the RCS. State governments would be best placed to extend road connectivity and public transportation to these airports. In Nagarjunasagar, the government can also think of developing multi-modal links due to the presence of the river Krishna - road, river transport etc. Likewise, in hilly terrains. ropeways can be used.

2. Would the ATC requirements for such airports be relaxed - with remote ATC allowed? Would result in cost savings and improve the viability of these airports. With GAGAN, India is at the forefront of technology for satelite based navigation. The same leadership should be shown for deploying remote ATCs in the airports under the RCS.

3. Helicopters - whose use under the scheme is limited in geographical area - can be covered under the scheme for all of India. What does it matter to the government if its a fixed wing or rotary wing aircraft doing the connecitivity? If anything, a helipad is cheaper to develop and maintain than an air strip.

4. Implementing Flexible Use of Airspace (FUA) to help ensure the small operators save money and time.

I look forward to the market connecting the dots in the un-served and under-served airports of India. Would be exciting to have small fixed-wing and rotary aircrafts connect our hinterland. The RCS is a much needed first step.