UDAN scheme gets Rs 28,840 crore boost to expand regional air connectivity

New Delhi: The Cabinet on Wednesday approved a Rs 28,840-crore proposal to revamp regional air connectivity over the next decade — a sixfold increase in allocation under the existing Udan (Ude Desh ka Aam Nagrik) scheme.

The scheme subsidises airlines flying to remote destinations at fares capped by the government. Its performance has been uneven so far. Of the 649 routes where flights had been launched, only about half remain operational as some airlines stopped flights after the threeyear subsidy window closed. Of the viability gap funding, 80% comes from a Rs 6,500 levy imposed on each metro flight.

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Full Support in First 2 Years

The state governments pick up the rest. The government has disbursed more than Rs 4,300 crore in subsidies and invested around Rs 4,700 crore in airport development since the launch of the programme in 2017.

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Under the revamped scheme, the subsidy period has been extended from three to five years: 100% of the subsidy support sought by airlines for the first two years, tapering over the next three.

Since remote airports have limited revenue streams and high recurring costs, the government will provide support for three years, Union minister Ashwini Vaishnaw said during a briefing on the Cabinet meeting. “After discussing with airlines, it was found that there was a need to increase the subsidy period,” he said.

The government has allotted an additional Rs 2,577 crore for airport maintenance during early years, when passenger traffic is too thin for airports to be self-sustaining. Under Udan, airlines bid for routes by quoting the subsidy per seat they need and must start flights within four months of winning a route. They will get threeyear exclusivity on these routes, insulating them from any competitive pressure during this period. Airports in remote locations levy a lower tax on aviation turbine fuel and do not charge airport fees.

“For smaller airlines, which are substantial players in remote connectivity, they can’t start flights due to non-availability of aircraft or readiness of the airport. It becomes a big financial burden for them. So, we have increased the subsidy period,” a government official said. Executives of small airline operators said they often struggle to get slots at major airports which becomes a hindrance to building a viable network.