UDAN Scheme Revamp – Expanding Regional Air Connectivity

UDAN Scheme Latest News

• The Union Cabinet has approved a revamped UDAN Scheme with higher funding and extended subsidy support. 

UDAN Scheme

• The Ude Desh ka Aam Nagrik (UDAN) scheme was launched in 2017 under the Regional Connectivity Scheme (RCS) to enhance air connectivity to underserved and unserved regions.
• Objectives
  • Improve regional connectivity across Tier-2 and Tier-3 cities. 
  • Make air travel affordable for common citizens. 
  • Promote balanced regional development. 
  • Enhance the infrastructure utilisation of unused and underutilised airports. 
• Key Features
  • Airlines are selected through a competitive bidding mechanism. 
  • Viability Gap Funding (VGF) is provided to airlines to operate on less profitable routes. 
  • 50% of seats are offered at a capped fare of around Rs. 2,500 per hour of flight. 
  • Focus on connecting remote, hilly, and island regions. 
• Funding Mechanism
  • Initially funded through a Regional Connectivity Scheme levy imposed on flights operating on major routes. 
  • The levy subsidised airlines operating on regional routes. 
• Achievements of the Scheme
  • Over 600 routes have been operationalised since launch. 
  • More than 90 airports, including many previously unused airstrips, have been revived. 
  • Improved last-mile connectivity in remote areas such as the North-East and hilly regions. 
• Challenges
  • Low route viability after subsidy withdrawal. 
  • Limited passenger demand in certain regions. 
  • Operational challenges such as infrastructure gaps and airline sustainability. 
  • High discontinuation rate of routes after the subsidy period. 

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News Summary

• The government has approved a major revamp of the UDAN scheme to address structural issues and improve sustainability.
• Increased Funding and Scope
  • The revamped scheme has a total outlay of Rs. 28,840 crore, which marks a nearly six-fold increase from the earlier allocation. 
  • The scheme now goes beyond airport redevelopment to include support for operations and maintenance.
• Extension of Subsidy Period
  • Subsidy support for airlines has been extended from three years to five years. 
  • This aims to improve route viability and reduce premature discontinuation. 
• Shift in Funding Source
  • Subsidy funding will now come directly from the government exchequer instead of the RCS levy. 
  • This marks a significant policy shift in financing the scheme. 
• Viability Concerns Highlighted
  • The revamp was triggered by poor performance under the earlier scheme:
  • Over 90% of routes fell into disuse after subsidy withdrawal. 
  • Only about 7%-10% of routes remained viable beyond the subsidy period, as noted by a CAG report. 
  • Out of 663 routes launched since 2017, 327 have been discontinued.
• Airport Infrastructure and Expansion
  • 100 additional airports will be redeveloped with an outlay of Rs. 12,159 crore. 
  • Around 441 aerodromes will receive operational and maintenance support. 
  • This reflects a shift from infrastructure creation to sustained operational support.
• Focus on Last-Mile Connectivity
  • Development of 200 helipads to improve connectivity in remote regions. 
  • Investment in helicopters and small aircraft to strengthen regional aviation networks. 
• Support for Aircraft Procurement
  • Procurement of HAL Dhruv helicopters for Pawan Hans. 
  • Procurement of HAL Dornier aircraft for Alliance Air. 
  • This aims to enhance fleet availability for regional routes.

Source: TH