UDAN Scheme

Imagine a government deciding that flying should not remain a luxury reserved for those who can already afford it, and deliberately capping airfares on specific routes at a level closer to an air-conditioned train ticket than a typical plane fare, then subsidising the difference so airlines still find those routes worth flying. UDAN, Ude Desh ka Aam Naagrik, meaning let the common citizen of the country fly, does exactly this.

UDAN, formally the Regional Connectivity Scheme, caps fares on selected regional routes at an affordable level and compensates airlines for the resulting revenue gap through Viability Gap Funding, already covered elsewhere on this site, alongside concessions like reduced airport charges and, crucially, sharply lower ATF taxation on these specific routes. This combination is specifically designed to make flying commercially viable for airlines on routes that would otherwise never turn a profit.

The scheme's reach has grown substantially since launch, with 625 routes and 85 airports operationalised by 2025, including over 100 routes specifically serving India's Northeast region, historically among the most poorly connected parts of the country by air. This is a genuinely significant expansion of who in India can realistically consider flying at all, not just those already living near a major metro airport.

The scheme's continuation, Modified UDAN, carries a Rs 28,840 crore outlay running from 2026 to 2036, a decade-long commitment reflecting both the scheme's judged success and an acknowledgement that regional route viability remains a genuinely ongoing challenge requiring sustained, not one-time, government support.

Whenever a smaller Indian city gains its first-ever scheduled commercial flight, UDAN's fare cap, viability gap funding and ATF tax concessions are almost always the specific combination of tools that made an airline willing to fly a route it would otherwise have judged commercially unviable on its own.