Business News/ Politics / Policy/  States set to introduce helicopter services to boost tourism under the UDAN scheme

New Delhi: Traveling in the Himalayan states is set to undergo a sea change with most tourist hotspots in the region getting helicopter services in the months to come, starting with Uttarakhand in October. The trend is also set to boost the helicopter market in India, something companies like Airbus have set their sights on.

Civil aviation secretary RN Choubey said in an interview, “In the first round of regional connectivity scheme UDAN, we did not get bids for helicopter services. But it changed in the second round in which we got many. This will actually change the face of travel in the hill states. I am very excited to see the roll out."

Uttarakhand, which has told the central government of its intention to open helicopter services from October, seeks to connect places like Mussoorie, Dehradun, Nainital, Almora and Joshimath with other parts of the state, while Himachal Pradesh seeks to link Kullu, Mandi, Dharamshala, Shimla and Manali with the rest of the state. Another civil aviation ministry official, who spoke on condition of anonymity said that Himachal Pradesh, Manipur, Assam and Arunachal Pradesh will commence operations after they complete the process of giving approvals. Under the scheme, 76 routes are awarded which counts travel to and from a destination as two routes.

Experts said the UDAN scheme could prove to be a major growth driver for the helicopter services industry and manufacturers like Airbus. Airbus said in July when it appointed Ashish Saraf as head of its helicopter division in India that its 100 units operating in the country are helping develop new market segments such as emergency services and heli-tourism.

The only thing that makes the government nervous about helicopter services is their cost, as helicopters carry fewer passengers than airplanes. “Helicopters are expensive machines," said Choubey. Helicopter fares under UDAN will be slightly higher than what are applicable for planes. For planes, the fare is 2,500 for 500-600 kilometers, indexed to inflation. Under the scheme, union government gives viability gap funding to operators while states give concessional value added tax rates on Jet fuel at the rate of 1% or less.

Industry watchers believe it is only a matter of time before these operations achieve economy of scale. “UDAN scheme seeks to achieve multiple goals including stimulating demand and increasing connectivity. Once people get into the habit of using helicopter services in hill states, volumes will pick up and then there will be no need for subsidising it further," said Dhiraj Mathur, leader of defence and aerospace practice at PwC India.

The government is now in the process of offering fresh routes under UDAN next month that will seek to connect iconic cities like Varanasi and Gaya to different towns. Besides improving regional connectivity, the government is also working on plans to step up the overall airport and heliport capacity to meet the rising demand for air travel. It envisages an increase in the number of air passengers from 265 million in 2017 to about one billion in 10-15 years for which an investment of about 3-4 trillion would be required. To put the required physical infrastructure in place, the Airports Authority of India has set a capital spending target of over 0,000 crore till FY22.

BP Sharma, chairman and managing director of state-owned helicopter service provider Pawan Hans Ltd., which won most of the helicopter routes in the second round of UDAN, was not available for comment.

Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Updated: 19 Aug 2018, 11:38 AM IST
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