Aditi Kumari
Policy Update
As of 2024, UDAN (Ude Desh Ka Aam Nagrik) Scheme has successfully launched 500 air routes. The program provides services for an underserved rural population to further make aviation affordable. The scheme was launched on October 21, 2016 under the National Civil Aviation Policy (NCAP) 2016. This flagship initiative of the Ministry of Civil Aviation aims to boost regional connectivity.
The first UDAN flight was on April 27, 2017 from Shimla to Delhi. And the expansion continues, targeting 1,000 new routes by 2026. Finance Minister Nirmala Sitharaman presented a revision of the UDAN scheme during the Budget 2025-26 to provide connections to 120 new destinations and transfer 4 crore passengers over the next ten years to better link air travel and connect rural and hilly regions.
Objectives of UDAN – RCS
The UDAN scheme was launched with the following key objectives:
- Enhancing Regional Connectivity: Connecting tier-2 and tier-3 cities and remote regions with major airports.
- Low-Cost Aviation: Making air travel affordable so the average person can fly.
- Operationalization of New Airports: Revitalization and expansion of unserved and underserved airports across the country
- Strengthening the Economy: Promoting trade, tourism, and the generation of jobs in smaller cities.
- Promoting new airlines: Providing financial and policy support to regional and small airlines
- Sustainable Aviation Development: Ensuring a sustainable environment for viable and affordable aviation business models.
Functioning of the UDAN Scheme
The RCS-UDAN is a demand-led model where the routes are tendered for through bids submitted by the airlines. The scheme operates through the following five mechanisms:
- Viability Gap Funding (VGF): The government provides the airlines on RCS routes with financial support in an attempt to ensure fares remain affordable. The funds are shared between the Central and the State Governments in the ratio 80:20 (90:10 in the Northeast and hilly regions).
- Subsidized Flight Prices: The program limits flight prices to ₹2,500 for a flight lasting an hour (500 km) to make it affordable. Airlines are provided with VGF for a short tenure (3 years) to continue operating.
- Infrastructure Development: Revitalization and upgrading of previously non-functional airports. Development of heliports and water aerodromes to provide air connectivity in remote regions
- Operational Incentives to Airlines: No fees for parking or landing or TNLC (Terminal Navigation Landing Charges) in RCS airports. VAT on Aviation Turbine Fuel (ATF) lowered to 1% or less in RCS airports for 10 years. Lower airspace navigation charges with discounts.
- Promotion of Private Sector Participation: Public-private partnerships (PPP) encouraged for airport development and operation. Airline Operators are given flexibility to expand their fleets and networks.
Impacts and Achievements of the UDAN RCS Scheme
The UDAN scheme has improved regional connectivity and brought the skies near to millions by making flying affordable. It has added 601 routes and established 86 airports, 13 of them being heliports and 2 water aerodromes, and carried 1.44 crore passengers since 2016. It has promoted business, tourism, and investments in Tier II and Tier III cities and created employment and bridged regional disparities.
The scheme revived major airports like Darbhanga, Jharsuguda, Tezu, and Hollongi and promoted regional carriers like Flybig, Star Air, and IndiaOne Air. More than 1,000 aircraft have been ordered by the carriers to enable further expansion. Tourism has exploded with special services between the places in the Northeast, religious sites like Khajuraho and Amritsar, and hill stations via helicopters.
UDAN also helped in the development of greenfield airports including Pakyong (Sikkim), Tezu (Arunachal Pradesh), and Kurnool (Andhra Pradesh). It received the Prime Minister’s Award for Excellence in Public Administration (2020) and featured in the Republic Day 2022 parade.
Source: Ministry of Information & Broadcasting
Challenges
It faces a series of challenges to its prosperity. Commercial sustainability is a key issue—there are too many routes with too low demand for the airlines to be able to operate profitably despite subsidization. Infrastructure at peripheral airports also poses barriers to smooth operation. Excessive operating expenses in the shape of fuel and maintenance add to the issue as much as the cap on airfares limits income for the airlines.
Low awareness on the part of passengers and competition from other transport modes like the Vande Bharat Express reduce demand. Further, the three-year finite nature of (VGF) becomes an issue in keeping it going in the longer term. Airport bottlenecks and lack of adequate landing slots at major airports including Mumbai and Pune result in further delays. Increased complexity in VGF calculations, rising safety concerns, and a shortage of trained aviation experts are significant barriers as well.
State governments have an important role by providing tax benefits and support services, but not all states implement them suitably. Uncertainty in demand, market risks, and subsidy sustainability create additional uncertainty. Refund policies and ticket cancellations are still ambiguous and affect passenger confidence.
Way Forward
To enable the long-term success of UDAN, the government must enhance financial sustainability by extending VGF on priority routes and adopting demand-based fare structures. Enhancing ancillary revenue streams in the form of chartered services and cargo services will also allow airlines to sustain themselves beyond the subsidy era. Infrastructure development remains the cornerstone, with a priority on the upgradation of regional airports, night landing facilities, and road and railway connectivity to airports. Developing additional Greenfield airports and streamlining airport clearances will further enhance connectivity in remote locations.
Overcoming operational issues involves increasing the scope of aviation training programs to cater to the need for professional manpower. Demand-based route addition strategy will avoid the allotment of non-viable routes and the addition of larger aircraft under UDAN 5.0 must be supported by the upgradation of airports as needed. Enhancing policy and regulatory support in the form of taxation concession on ATF, accelerated VGF release, and acquisition of dedicated slots for regional flights at major airports is needed. Increased participation by state governments will facilitate smooth implementation.
Boosting passenger demand through targeted awareness drives, tourism alliances, and reward programs will make people use regional flights. Discount coupons, seasonal offers, and frequent flyer packages can be introduced by the airlines. In the end, green technology in the shape of electric and hybrid aircraft, Sustainable Aviation Fuel (SAF), and carbon-neutral airports will align UDAN with Indian green aspirations and reduce expenditure as well.
Conclusion
Prioritizing financial fitness, infrastructural development, operating efficiencies, and green flying, UDAN will continue to redefine the Indian aviation sector with the objective to make the sky even more accessible and drive regional development. In the coming times, the government will unlock 1,000 new routes until 2026. UDAN 5.0 will have quicker implementation, larger aircraft, and better financial support to drive greater accessibility through the air in the hilly and remote regions. The scheme continues to redefine the Indian aviation sector in meeting its mission: “Ude Desh Ka Aam Nagrik.”
References
- UDAN Scheme. (2023). Ministry of Civil Aviation. https://www.civilaviation.gov.in/sites/default/files/migration/Udaan_Eng.pdf
- National Civil Aviation Policy. (2025). Airports Authority of India. https://www.aai.aero/en/rcs-udan
- Functioning of the UDAN. (2024). Ministry of Civil Aviation. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2066445#:~:text=The%20scheme%20incentivizes%20airlines%20to,Central%20Government%2C%20and%20State%20Governments
- Impacts of UDAN. (2024). Ministry of Civil Aviation. https://pib.gov.in/PressReleseDetailm.aspx?PRID=2066780®=3&lang=1
- Achievements of UDAN. (2022). Ministry of Civil Aviation. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1818418
- UDAN 5.0. (2023). Ministry of Civil Aviation. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1918622
- UDAN Scheme Statistics. (2025). Ministry of Information & Broadcasting. https://pib.gov.in/PressReleasePage.aspx?PRID=2098788
- Union Budget 2025-26 for UDAN Scheme. (2025). Ministry of Finance. https://pib.gov.in/PressReleasePage.aspx?PRID=2098382
About the Author
Aditi Kumari is a research intern at the Impact and Policy Research Institute (IMPRI), pursuing Post graduation in Sociology.
Acknowledgement
The author extends sincere gratitude to Aasthaba Jadeja for their invaluable guidance and informative inputs.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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Ude Desh Ka Aam Nagrik (UDAN) – 2016: Regional Connectivity Scheme (RCS)
