Menu
National

Modified UDAN Scheme (UPSC/RAS)

Read in:
  • The scheme marks a major step towards making air travel more affordable and accessible to citizens. It also expands connectivity to underserved and unserved regions. India now ranks as the third-largest domestic aviation market globally.
  • Nodal ministry - Ministry of Civil Aviation (MoCA).

1. Macro Context & Evolution

  1. The Launch- The Regional Connectivity Scheme (RCS) – UDAN (Ude Desh ka Aam Nagrik) was originally rolled out in October 2016 to democratize air travel by connecting unserved and underserved regions.
  2. Market Scale- Driven by infrastructure expansions, India has emerged as the third-largest domestic aviation market globally. The total number of operational airports in the country scaled 165 as of July 15, 2026.
  3. The Structural Shift- To consolidate early gains and build long-term operational sustainability, the Union Cabinet approved the Modified UDAN Scheme .

2. Core Parameters of Modified UDAN

  1. Duration & Timeline- Implemented over a 10-year horizon spanning from FY 2026-27 to FY 2035-36.
  2. Financial Footprint- Backed by a total fiscal outlay of ₹28,840 crore.
  3. Primary Objective- Shifting focus from mere route generation to rapid airport infrastructure development, extensive last-mile connectivity, and transitioning regional routes into commercially viable markets.

3. Key Functional Components & Budgetary Allocations

  • The components of Modified UDAN are structured to address long-term operational viability-

MODIFIED UDAN COMPONENTS

  1. Aerodrome Development (₹12,159 crore over 8 years)                          
  2. Operation & Maintenance Support (₹2,577 crore)                          
  3. Modern Helipad Infrastructure (₹3,661 crore over 8 years)                           
  4. Viability Gap Funding (VGF) for Airlines (₹10,043 crore)

Full explanation -

I. Development of Aerodromes

  • Target- Mandates the transformation of 100 existing unserved airstrips into operational airports to integrate small towns into the national transportation net.
  • Funding Allocation- Allocated a specific outlay of ₹12,159 crore distributed over the initial eight years.

II. Operation and Maintenance (O&M) Support

  • Target- To buffer small airports that face high recurring overhead costs paired with limited local commercial revenue streams during their startup phase.
  • Mechanism- Provides direct, structured financial support for a fixed period of three years.
  • Caps- Annual funding is strictly capped at ₹3.06 crore per airport and ₹0.90 crore per annum per heliport/water aerodrome. Estimated at ₹2,577 crore, this rail will sustain approximately 441 regional aerodromes.

III. Development of Modern Helipads

  • Target- Focused explicitly on priority networks, difficult terrains, and remote geographic areas where conventional runways are technically or topographically impossible.
  • Scale- Envisions building 200 modern helipads to boost critical healthcare access, emergency response management, and local economic connectivity.
  • Cost Dynamics- Each individual unit is budgeted at an estimated cost of ₹15 crore, creating a projected component outlay of ₹3,661 crore over eight years.

IV. Viability Gap Funding (VGF) for Airlines

  • Target- Financial rail to incentivize commercial operators to fly low-volume, high-risk regional routes.
  • Funding Allocation- Allocated ₹10,043 crore over the entire ten-year period.
  • Tapered Mechanism- Individual airlines can claim VGF subsidies for a maximum duration of five years. To encourage market maturity, a tapered funding mechanism commences automatically from the third year, while exclusive route monopolies are strictly restricted to three years.

4. Strategic Elements- Aatmanirbharta & Financing Innovation

  1. Indigenous Aviation Capacity- To tackle the chronic shortage of small aircraft specialized for remote littoral or high-altitude geographies, Modified UDAN directly funds the induction of domestic defense aerospace assets under the Atmanirbhar Bharat vision-
    a.) Two HAL Dhruv helicopters allocated for Pawan Hans.
    b.) Two HAL Dornier aircraft allocated for Alliance Air.
  2. Sovereign RCS Levy Mechanism- Unlike massive economic blocks (US, Canada, Brazil) that rely purely on direct state public budgeting, India utilizes a unique internal model. The scheme is funded through an RCS levy mechanism, which extracts a minor fee across selected premium domestic mainline flight categories to cross-subsidize remote grassroots runways.

5. 9 Years of Baseline UDAN

  1. Routes Operationalized- 679 routes.
  2. Air Gateways Integrated- 95 distinct airports, heliports, and water aerodromes.
  3. Traffic Density- Over 3.58 lakh flights operated, serving more than 1.68 crore passengers.
  4. Regional Impact- Drastically compressed travel times across crucial circuits (e.g., the road link between Vijayawada and Kadapa dropped from 8–10 hours by road to roughly 1 hour via the air rail).
  5. Welfare Value Additions- Deployed secondary customer welfare amenities including UDAN Yatri Cafésfor low-cost food options, Flybraries for free book access, and complementary Wi-Fi systems across terminal frames.

Source : PIB