UDAN Scheme: Objectives, Features, and Significance

India’s aviation sector has witnessed remarkable growth over the past decade. The government introduced the Ude Desh Ka Aam Nagrik (UDAN) Scheme in 2016 to further promote regional connectivity. This initiative aims to make air travel affordable and accessible for the common citizen while boosting economic development in tier-II and tier-III cities.

What is the UDAN Scheme?

The UDAN (Ude Desh Ka Aam Nagrik) Scheme is a Regional Connectivity Scheme (RCS) launched in October 2016 by the Government of India to make air travel affordable and accessible in tier-II and tier-III cities. The scheme was launched to develop new airports and upgrade existing regional airports to increase the number of operational airstrips for scheduled civilian flights. 

The UDAN Scheme was also designed to introduce financially viable regional flight routes with capped airfares. These routes will connect over 100 smaller airports in towns to major cities to accessibility and make it easier for people to travel.

The government offers financial incentives and subsidies, like Viability Gap Funding (VGF) and exemptions from certain airport charges, to encourage airline participation. The scheme also ensures that 50% of the seats on UDAN flights are available at a capped fare of ₹2,500 for a one-hour journey.

Since its launch, UDAN has expanded through multiple phases, adding hundreds of new routes, operationalizing underutilized airports, and introducing helicopter and seaplane services to remote areas. The latest phase, UDAN 5.5, continues to enhance regional connectivity by supporting more destinations and improving airlines' financial viability.

Budget 2025 Update on the UDAN Scheme

• The Central Government is set to expand the UDAN scheme, as Finance Minister Nirmala Sitharaman announced in the Union Budget 2025-26. 
• Over the next 10 years, the scheme will include 120 new destinations expected to benefit 4 crore additional passengers. 
• While the total outlay for the Civil Aviation Ministry was not disclosed, the budget has allocated ₹540 crore for the UDAN Scheme in FY26. 

Objectives of the UDAN Scheme

The key objectives of the UDAN Scheme are:

• To reduce airfare for travelers in regional areas by providing subsidies to airlines.
• To establish air connections between underserved and unserved airports, enhancing overall connectivity.
• To revitalize underutilized and non-operational airports.
• To encourage private airlines to operate on routes that are not profitable by offering government incentives.

Features of the UDAN Scheme

The UDAN Scheme includes several distinctive features that enhance its accessibility, efficiency, and long-term viability.

Phase-wise Expansion: 

• The scheme follows a phase-wise expansion model. 
• Each phase expands coverage by introducing new routes and improving connectivity.

Airport Infrastructure Development: 

• The UDAN Scheme focuses on setting up Greenfield airports and upgrading Brownfield airports to enhance regional connectivity.

Financial Support: 

• Airlines receive subsidies to offer discounted fares, capped at ₹2,500 for a one-hour flight. 
• This ensures accessibility for passengers while maintaining airline viability.

RCS Levy: 

• A fee charged on non-UDAN flights is used to finance subsidies for airlines operating UDAN routes. 
• The cross-subsidization model supports the sustainability of the scheme.

Public-Private Partnership: 

• The UDAN scheme involves collaboration between state governments, private airlines, and airport operators to facilitate expansion.

UDAN Scheme Phases

The UDAN scheme is implemented in multiple phases. Here’s an overview of each phase:

UDAN 1.0 (2017): The initial phase awarded 128 flight routes connecting 70 airports, including 36 newly operational airports. Five airlines participated to make air travel affordable and widespread.

UDAN 2.0 (2018): This phase expanded the scheme by adding helipads and focusing on underserved regions. It announced 73 unserved airports, enhancing connectivity to remote and hilly areas.

UDAN 3.0 (2019): The scheme introduced tourist routes, seaplanes to connect water aerodromes, and routes in the North-East region. The objective was to boost tourism and connect water bodies.

UDAN 4.0 (2020): Approved in 2020, this phase added 78 new routes, including connections to the Lakshadweep islands, further expanding the scheme’s reach. UDAN 4.1 focused on connecting small airports and introducing special helicopter and seaplane routes, this phase proposed new ways under the Sagarmala seaplane services.

UDAN 5.0 (2023): This phase removed distance restrictions between origin and destination. It focused on Category-2 and Category-3 aircrafts, UDAN 5.0 introduced measures to expedite operationalization and enhance connectivity.

UDAN 5.1 (May 2023): This phase was focused on helicopter connectivity, reducing airfare caps by 25%, and increasing Viability Gap Funding (VGF) for remote areas.

UDAN Scheme Eligibility

The UDAN scheme has specific eligibility criteria to ensure effective implementation and accessibility for airlines, airports, and passengers.

• Airlines: Any scheduled or non-scheduled airline meeting the operational criteria can apply for UDAN routes.
• Airports: Only underdeveloped or unserved airports are eligible for inclusion under UDAN.
• Passengers: All travelers can avail of discounted fares under the scheme.

Provisions of the UDAN Scheme

The UDAN scheme includes provisions to reduce costs, support airlines, and improve regional air connectivity.

• Subsidized Airfares: To make air travel affordable in tier-II and III cities, participating airlines receive subsidies to offer 50% of their seats at a capped fare of ₹2,500 for a one-hour flight UDAN Scheme.
• Government Incentives: Airlines receive financial support to cover operational losses on UDAN routes.
• Infrastructure Investments: ₹4,500 crore was allocated for reviving and upgrading regional airports.
• RCS Levy Changes: The government announced that a levy of ₹6,500 per flight on non-UDAN flights will fund the subsidies offered to airlines from April 2023 to April 2027.
• Airport Operators: Landing and parking charges for RCS flights are waived, and AAI exempts them from Terminal Navigation Landing Charges (TNLC), with discounted Route Navigation and Facilitation Charges (RNFC).
• Central Government: Aviation Turbine Fuel (ATF) at RCS airports is taxed at a reduced 2% excise duty for three years. Airlines are encouraged to enter code-sharing agreements.
• State Governments: VAT on ATF is reduced to 1% or less for ten years, and essential services like security, fire, and utilities are provided at lower rates to support airline operations.

Components of the UDAN Scheme

The UDAN Scheme comprises key components that support regional air connectivity through infrastructure development, financial aid, and public-private partnerships.

Airport Development: 

• Expansion of underutilized and unserved airports, including new Greenfield airports and upgrades to existing Brownfield airports to increase operational capacity.

Public-Private Partnership (PPP): 

• Collaboration between state governments, airport operators, and private airlines to expand regional connectivity.

Viability Gap Funding (VGF): 

• The UDAN Scheme sought financial concessions from the central and state governments and airport operators. 
• Viability Gap Funding (VGF) is a government grant that helps airlines cover the shortfall between operational costs and expected revenue. 
• The Regional Connectivity Fund (RCF) was established to finance VGF and support the scheme’s sustainability.

Types of aircraft: 

• The UDAN scheme includes a variety of fixed-wing aircraft, helicopters, and seaplanes to improve regional connectivity. 
• Small aircraft are used for remote areas, mid-sized planes for regional routes, and larger aircraft for high-demand sectors. 
• Special provisions for helicopter services in hilly and inaccessible regions and seaplane operations to connect water aerodromes have been made.

Significance of the UDAN Scheme

Since its launch in 2016, the UDAN Scheme has played a transformative role in India’s aviation sector in the following ways:

Expansion of Regional Connectivity: 

• As of October 2024, UDAN has operationalized 619 routes, connecting 88 airports. 
• This includes previously underserved and unserved regions. 
• Around 28% of operational UDAN routes serve remote and geographically challenging locations, ensuring better accessibility for underserved communities.

Increased Passenger Access: 

• The number of operational airports has doubled from 74 in 2014 to 157 in 2024, with a vision to expand to 350-400 by 2047.
• Over 1.44 crore passengers have benefited from more than 2.8 lakh flights. 
• This highlights the UDAN scheme’s success in making air travel affordable and widely accessible. 

Promoting Tourism: 

• The scheme has significantly boosted religious and regional tourism by enhancing connectivity to destinations like Khajuraho, Deoghar, Amritsar, and Kishangarh (Ajmer). 
• UDAN 3.0 introduced tourism-specific routes in the Northeast, while UDAN 5.1 expanded helicopter services in hilly areas to stimulate tourism and local economic growth.

Developing Key Airports: 

• UDAN has revived and developed airports in remote areas, leading to the establishment of greenfield airports in Pakyong (Sikkim), Tezu (Arunachal Pradesh), and Kurnool (Andhra Pradesh), improving last-mile air connectivity. 
• Airports like Darbhanga, Prayagraj, Hubli, Belgaum, and Kannur have become more sustainable, with non-RCS commercial flights now operating from these locations. 

Diverse Aircraft Deployment: 

• The scheme has supported a wide range of aircrafts, from small commuter planes to larger commercial jets. 
• This flexibility enables airlines to efficiently serve varied route demands, improving regional connectivity.

The UDAN Scheme has been pivotal in making air travel more accessible to millions of Indians. The scheme will expand its reach and impact significantly over the next decade with continued government support and adjustments.

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