10 Years of UDAN Scheme

Syllabus: GS3/Economy 

In News

• The UDAN Scheme completed ten years and considerably expanded the regional aviation network of India by linking unserved and underserved areas.

UDAN Scheme

• The Prime Minister of India launched the Regional Connectivity Scheme (RCS) – UDAN (“Ude Desh ka Aam Nagrik”) in 2016.
• It was conceptualised under the National Civil Aviation Policy (NCAP) 2016 with a 10 year vision to connect Tier-2 and Tier-3 cities through a market driven and financially supported approach. 
• It entered its operational stage with the inauguration of the first RCS-UDAN flight from Shimla to Delhi in April 2017. 
• It incentivised the airlines with concessions and Viability Gap Funding (VGF) to fly on the rural routes with cheap rates and enhanced accessibility.

Progress

• Lines Operationalised: The plan has operationalised 687 regional lines in India.
• Aerodromes Operationalised: Total 95 aerodromes including 17 heliports and 02 water aerodromes have been operationalised.
• Flights Operated: Under the plan more than 3.68 lakh flights have been operated.
• Passengers Carried : The initiative has enabled 1.72 crore passengers to fly.

Latest Developments

• The Union Cabinet has approved the launch and implementation of the Regional Connectivity Scheme – Modified UDAN for a period of ten years from FY 2026-27 to FY 2035-36 with a total outlay of Rs.28,840 crore .

Components of the Modified UDAN  scheme 

• Development of 100 airports from existing unserved airstrips over a period of eight years with an outlay of ₹12,159 crore
• Construction of 200 modern helipads in remote, hilly, island and aspirational areas with an estimated cost of ₹3,661 crore
• Allocation of ₹10,043 crore over ten years as Viability Gap Funding (VGF) to the airlines for operating regional routes.

Significance

• Inclusive growth: Tier 2 and 3 cities are now integrated into the national market.
  • For ex: Vijayawada to Kadapa, earlier 8 to 10 hours by road, is now a short flight. 
• Infrastructure expansion: Operational airports rose from 74 in 2014 to 165 by July 2026. 
• Strategic and regional balance: Connectivity to the North East, hills and islands strengthens border area integration. 
• Economic multiplier: Regional airports support tourism, MSMEs and perishable exports.
• Industry demand: The scheme created demand for ATR and smaller aircraft, MRO services and pilot training, which supports aviation sector jobs.

Challenges and Concerns

• Route sustainability: Many routes collapse once VGF ends after three years. Airlines have little incentive to continue where load factors are low and demand has not matured.
• Dormant airports: Several airports were built or revived without demand assessment. Parliamentary and audit reports have flagged underused infrastructure and poor last mile connectivity to terminals.
• Fiscal burden: Dependence on subsidy raises questions about long term viability and fiscal prudence.
• Airline fragility: Small regional carriers face high ATF costs, VAT on fuel varying across states, leasing costs and aircraft shortages. Several operators have exited the market.
• Operational and safety issues: Hilly terrain, short runways, weather and thin MRO support increase risk and cancellations.

Way Forward

• Demand led planning: Assess catchment potential before awarding routes, and link airports with rail, road and local transport.
• Rationalise taxes: Bring ATF under GST or harmonise state VAT to lower operating costs.
• Support airlines: Encourage aircraft leasing, MRO hubs in India and pilot training to reduce structural costs.
• Phase out VGF gradually: Shift from subsidy to market viability through bundled routes, cross-subsidy, and bundling with commercial routes.

Source: PIB