UDAN scheme with changes in subsidy, Pg1

Key Highlights:

• The Union Cabinet approved modifications to the UDAN scheme with a total outlay of ₹28,840 crore.
• The subsidy period for airlines on select Tier-2 and Tier-3 routes has been extended from three to five years.
• The subsidy will now be provided through direct funding from the exchequer instead of a levy on airfares.
• As of February 2026, 327 out of 663 UDAN routes launched since 2017 have been discontinued.

Detailed Insights:

• The modified UDAN scheme aims to improve the viability of regional routes by providing airlines with longer subsidy support.
• Out of the total outlay, ₹10,043 crore is allocated for subsidies to support airlines operating on regional routes over the next 10 years.
• The shift to direct funding from the exchequer addresses the previous system where subsidies were funded through a Regional Connectivity Scheme (RCS) levy on non-UDAN routes.
• A CAG report revealed that only 7% to 10% of UDAN routes remained viable after the initial three-year subsidy period, prompting the policy change.
• Data presented in Parliament indicated that 15 of the 95 airports revived under the scheme have also become non-operational.

Key Concepts Involved:

• UDAN Scheme: A regional airport development scheme of the Government of India to enhance air connectivity to Tier-2 and Tier-3 cities.
• RCS Levy: A fee added to airfares on non-UDAN routes to fund subsidies for airlines operating on regional routes under the UDAN scheme.
• Exchequer: The national treasury or the government's general fund.