Context
Recently, the Union Cabinet, chaired by the Prime Minister, approved the “Modified UDAN” (Ude Desh ka Aam Naagrik) scheme with a total outlay of ₹28,840 crore for a period of ten years (FY 2026-27 to FY 2035-36).
1. Overview of the Scheme
- Nature: It is a Regional Connectivity Scheme (RCS) launched in October 2016 under the National Civil Aviation Policy (NCAP) 2016.
- Ministry: It is an initiative of the Ministry of Civil Aviation (MoCA).
- Objective: To facilitate “affordable” air travel for the common man and to develop the regional aviation market by connecting unserved and underserved airports.
- Duration: Originally planned for 10 years; the modified version now extends the vision toward Viksit Bharat 2047.
2. Key Components of “Modified UDAN” (Launched March 2025/26)
- Extended Subsidy: The government has extended the Viability Gap Funding (VGF) support for airlines from the previous 3 years to 5 years to ensure routes become commercially viable.
- Infrastructure Targets: The scheme proposes to develop 100 airports from existing unserved airstrips and 200 modern helipads at an estimated cost of ₹15 crore each.
- Operation & Maintenance (O&M) Support: For the first time, the government will provide O&M support for three years to RCS-only aerodromes (capped at ₹3.06 crore per airport annually).
- Funding Shift: The subsidy burden is shifting from a levy on trunk routes (Regional Connectivity Fund) to direct Exchequer-based budgetary support.
- Indigenous Push: The scheme includes the procurement of HAL Dhruv helicopters and HAL Dornier aircraft to promote Atmanirbhar Bharat in the aviation sector.
3. Financial and Operational Mechanism
- Viability Gap Funding (VGF): This is a financial grant provided to the Selected Airline Operator (SAO) to bridge the gap between the cost of operations and expected revenues.
- Fare Caps: To keep travel affordable, airfares for a fixed number of seats (usually 50% of the capacity) are capped based on flight duration or distance.
- Concessions by Stakeholders:
- Central Government: Provides excise duty reduction on Aviation Turbine Fuel (ATF) to 2%.
- State Governments: Provide land free of cost, reduce VAT on ATF to 1% or less, and provide security/fire services.
- Airport Operators: Waive landing, parking, and Terminal Navigation Landing Charges (TNLC).
4. Evolution Phases
- UDAN 1.0: Focused on connecting unserved airports with small aircraft.
- UDAN 2.0: Introduced helicopter routes for the first time in hilly and remote areas.
- UDAN 3.0: Introduced Tourism routes and Seaplanes (Water Aerodromes).
- UDAN 4.0: Enhanced focus on the North-East Region, Hilly States, and Islands.
- UDAN 5.0 Series: Removed distance caps (600 km limit) and focused on Category-2 (20-80 seats) and Category-3 (>80 seats) aircraft.
Q. With reference to the "Modified UDAN" (Regional Connectivity Scheme) approved in 2026, consider the following statements:
1. The subsidy period for airlines on selected regional routes has been increased from three years to five years.
2. The scheme is now entirely funded through a levy imposed on domestic flights on trunk routes.
3. It includes a provision for Operation and Maintenance (O&M) support for regional aerodromes for a limited period.
Which of the statements given above is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3
Answer: C
Solution:
STATEMENT 1 IS CORRECT: Under the Modified UDAN scheme, the government has extended the subsidy (VGF) period from 3 years to 5 years to help airlines achieve better sustainability on Tier-2 and Tier-3 routes.
STATEMENT 2 IS INCORRECT: While the original scheme relied heavily on a levy (RCF) on trunk routes, the Modified UDAN involves a significant shift toward direct funding from the exchequer (budgetary support) to meet the expanded ₹28,840 crore outlay.
STATEMENT 3 IS CORRECT: The revamped scheme introduces O&M support for approximately 441 aerodromes for an initial period of three years to address high recurring costs at low-traffic airports.
