Govt clears ₹28,840 crore revamped UDAN scheme; offers support for airport operations, shifts airline subsidy burden to exchequer

The government has cleared an expanded version of its flagship aviation connectivity programme, the UDAN scheme, with a total outlay of ₹28,840 crore, marking a nearly six-fold increase over the earlier allocation. The revamped scheme goes beyond airport redevelopment to include sustained support for operations and maintenance.

In a key shift, the subsidy to airlines operating on selected Tier-2 and Tier-3 routes, which was earlier funded through a Regional Connectivity Scheme (RCS) levy on passengers flying on non UDAN routes, will now be directly borne by the government.

Under the plan, 100 airports will be redeveloped from unserved airstrips with an outlay of ₹12,159 crore over eight years, aimed at expanding the regional aviation network.

To address the viability of low-traffic facilities, the government will provide operations and maintenance (O&M) support for three years, capped at ₹3.06 crore per airport and ₹0.90 crore per heliport or water aerodrome, with a total estimated cost of ₹2,577 crore covering around 441 aerodromes.

In a push to improve last-mile connectivity, particularly in remote and difficult terrains, the scheme also proposes 200 helipads, each costing ₹15 crore, translating into a total investment of ₹3,661 crore.

A key shift comes in the funding model for airlines. The government has proposed ₹10,043 crore in viability gap funding (VGF) over 10 years to support regional routes. Unlike the earlier framework, where subsidies were largely funded through a levy on passengers flying on non-UDAN routes and limited to three years, the revised scheme places the subsidy burden directly on the government and extends support for a longer duration.