The Government of India launched the Ude Desh Ka Aam Nagrik (UDAN) scheme in 2016. This initiative aims to promote the growth of the aviation sector by making air travel affordable to the common man. It also helps boost regional connectivity in tier-2 and tier-3 cities.
GoI launched this scheme with the objective of developing new airports and revamping existing ones. This would help boost number of operational airstrips for scheduled civilian flights. It also introduced financially viable regional flight routes with capped airfares.
UDAN flights include various government funded incentives and subsidies, like Viability Gap Funding (VGF) and exemptions from airport charges. This will encourage airline operators participate in the UDAN scheme. So, they could offer 50% of the seats on UDAN flights at just Rs 2500 for a one-hour journey.
Finance Minister Nirmala Sitharaman further bolstered the UDAN scheme by adding 120 new destinations in the Union Budget 2025. The modified scheme bolsters regional connectivity with a carrying capacity of 4 crore passengers in the next 10 years.
The UDAN scheme gets a new budget of Rs 540 crore in FY26 which is 7.5% higher than the previous budget allocation.
“Launching of a modified UDAN scheme to enhance regional connectivity to 120 new destinations and catering to additional four crore passengers over the next 10 years. Brownfield and greenfield projects for airports in Bihar have also been announced. These will have a positive impact on the Indian aviation sector by way of strengthening air connectivity to underserved and unserved regions, thereby boosting air passenger traffic,” said Kinjal Shah, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Limited.
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