Modified UDAN Scheme:
The Union Cabinet has approved the Regional Connectivity Scheme – Modified UDAN with a Rs 28,840 crore outlay for 2026–2036, aiming to strengthen regional aviation and address viability issues in earlier phases.
- The Modified UDAN scheme, introduced in the Union Budget 2025–26, is a revamped version of the UDAN (Ude Desh ka Aam Nagrik) initiative, aimed at ensuring affordable air travel, improving connectivity to Tier-2 and Tier-3 cities, and promoting both infrastructure development and long-term operational sustainability.
- While the original UDAN scheme, launched in October 2016, successfully operationalized 663 routes and carried over 162.47 lakh passengers, it faced significant sustainability challenges:
- According to a Comptroller and Auditor General of India report, only 7% to 10% of routes remained financially viable after their initial subsidy period ended.
- The original three-year cap on subsidies was not long enough for airlines to develop self-sustaining markets on Tier-2 and Tier-3 routes.
- Out of the 663 routes launched since 2017, 327 had fallen into disuse by February 2026.
- 15 of the 95 airports revived under the scheme had ceased operations.
- Core Pillars of the Modified UDAN:
- Extended Subsidies (Viability Gap Funding): To keep airfares affordable (historically capped at Rs 2,500 per hour of flight for half the seats), the government subsidizes airline operators.
- The modified scheme extends this subsidy window from three to five years, giving airlines a longer runway to establish profitable routes.
- Direct Government Funding: Instead of funding these subsidies through an extra levy added to passenger tickets on major routes, the financial support will now come directly from the government exchequer.
- Operations & Maintenance (O&M) Support: Moving beyond just building airports, the government will now actively subsidize the day-to-day running costs of low-traffic aerodromes to prevent them from shutting down.
- Massive Infrastructure Expansion: The scheme targets the development of 100 airports from currently unserved airstrips and the construction of 200 modern helipads specifically designed for remote, hilly, and island regions.
- Focus on Indigenous Aviation: Aligning with the Atmanirbhar Bharat initiative, the program includes provisions to procure locally manufactured aircraft, such as HAL Dhruv helicopters and HAL Dornier planes, to navigate difficult terrains.
