UDAN: Regional Connectivity Scheme Set to Get a Major Boost

In an effort to expand air connectivity to smaller cities and remote regions across the country, the Central Government is considering steps to further strengthen and make the Regional Connectivity Scheme (UDAN) more attractive. To address the financial losses faced by airlines operating services to remote areas, a new financial support plan is under consideration and is expected to require approval from the Union Cabinet.

Launched in 2016, the UDAN scheme aims to make air travel affordable and accessible to the common public. Under this initiative, a price cap has been imposed on ticket fares for nearly half the seats on each flight. However, low passenger demand and fare restrictions have made several routes commercially unviable, forcing airlines to discontinue certain services. To mitigate these challenges, the government has been offering various incentives, including exemptions and subsidies on aircraft landing and navigation charges.

Existing Subsidy Structure

At present, around 80 percent of the subsidy per commercial flight (approximately ₹6,500) is borne by the Central Government, while the remaining amount is shared by the respective State Governments where the airports are located.

Expenditure So Far

Since the launch of the UDAN scheme, the government has provided subsidies amounting to over ₹4,352 crore. In addition, ₹4,638 crore has been invested in the development of airports. Despite this significant expenditure, the outcomes have been mixed. Of the 649 routes awarded so far, only about 60 percent are currently operational. Moreover, the Ministry of Civil Aviation has spent nearly ₹900 crore on the development of 15 regional airports, which are presently non-operational.

New Proposals Under Consideration

Currently, airlines that win bids for UDAN routes are required to commence services within four months, with exclusive rights to operate on those routes for three years. The government is now considering extending the subsidy period beyond the existing three years. Additionally, lower taxes on Aviation Turbine Fuel (ATF) and exemptions from airport charges at remote regional airports are expected to continue.