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Home / IAS Preparation / Government Schemes of India / Udan Scheme

UDAN Scheme: Aim, Features, Significance, & More | UPSC Notes

Last Updated on Aug 12, 2024
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The UDAN scheme full form is ‘Ude Desh ka Aam Nagarik.’ It is a regional connectivity project that connects rural areas of the country by plane at a reduced rate. UDAN 4.0 has 78 new routes for low-cost flights. The regional connectivity programme will apply to routes with lengths ranging from 200 to 800 kilometres. No lower limit is imposed for hilly, isolated, island, or security-sensitive areas. Allocations will be distributed fairly among five regions – North, West, South, East, and North East – with a cap of 25% for balanced regional growth.

In the present article on the UDAN Scheme UPSC, we shall see the features and significance of the Ude Desh Ka Aam Nagrik scheme, which will be helpful in your UPSC Exam.

GS Paper

General Studies Paper III

Topics for UPSC Prelims

Objectives of UDAN (Ude Desh ka Aam Nagrik), Phases and Implementation, Regional Connectivity Fund, Key Beneficiary Airports, Viability Gap Funding

Topics for UPSC Mains

Impact on Regional Connectivity, Economic and Social Impact of UDAN Scheme

What is UDAN Scheme?

UDAN, also known as Ude Desh Ka Aam Nagrik, is a scheme to make air travel more affordable for the general public in India's tier II and III cities. The central government plans to provide a 2% excise on Value Added Tax (VAT) and service tax at one-tenth of the rate. Additionally, liberal code sharing will be allowed for airports participating in the regional connectivity scheme. A Regional Connectivity Fund (RCF) will be established to finance the scheme, funded through a tax on specific flights. The states are expected to contribute 20% to the fund. The government states that if the passenger load factor remains high, the Viability Gap Funding (VGF) will be reduced and eventually phased out after three years once the route becomes self-sustainable.

Source: MyGov Blog

Objectives of the UDAN Scheme

The UDAN (Ude Desh ka Aam Nagrik) Scheme is a regional airport development and connectivity scheme launched by the Government of India to stimulate regional air connectivity and make air travel affordable for the common man. The primary objectives are:

  • To Enhance Regional Connectivity: By connecting underserved and unserved airports, UDAN aims to provide better connectivity to remote and regional areas.
  • To Make Air Travel Affordable: By offering subsidized fares, the scheme intends to make air travel accessible to a larger segment of the population, thereby increasing the number of air travelers.
  • To Promote Inclusive Growth: Ensuring balanced regional development by facilitating the movement of people, goods, and services, which in turn supports tourism, job creation, and economic development.

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Components of UDAN Scheme

The UDAN Scheme comprises several critical components aimed at expanding and developing air connectivity while making it cost-effective and sustainable. The main components include:

  • Viability Gap Funding (VGF) Mechanism: The scheme provides financial support to airlines to bridge the gap between the cost of operations and expected revenues, ensuring airline profitability on regional routes.
  • Infrastructure Development: Development and operationalization of regional airports and helipads to improve accessibility.
  • Subsidized Airfare: UDAN caps airfares for a significant portion of seats on UDAN flights, making them affordable for the general public.

These components work in tandem to enhance the overall regional aviation ecosystem, fostering economic growth and connectivity.

Read the article on Pradhan Mantri Jan Dhan Yojana!

Provisions of the UDAN Scheme

Key provisions include Viability Gap Funding (VGF) to support airlines, capped airfares to make travel affordable, and the development of regional airport infrastructure.

  • Benefited Airports: The UDAN project aims to connect un-served and under-served airports by revitalizing existing airstrips and airports. 
  • Implementing Agency: The implementation of the project is entrusted to the Airports Authority of India (AAI).
  • Phases of the Bidding: The bidding process for route awards will be completed in three distinct phases by the end of 2018.
  • Applicable Route Length: The scheme applies to routes ranging from 200 to 800 kilometres, with no lower restriction for hilly, rural, island, or security-sensitive areas.
  • Creation of a Fund: A Regional Connectivity Fund (RCF) will finance the scheme by taxing certain flights.
  • Flight Cost: Flights travelling approximately 500 kilometres per hour will cost Rs. 2,500. Helicopter operations will also be permitted for the first time, with rates of Rs. 2,500 for a 30-minute flight.
  • Equal Allocation: Allocations will be distributed equally among five regions - North, West, South, East, and North East - with a 25% cap to ensure balanced regional growth. 
  • Incentives: The initiative incentivises airlines to launch additional flights to underserved smaller cities and villages, making these operations economically viable. 
  • Invested Amount: The AAI plans to invest Rs. 17,500 crore in upgrading airport infrastructure by 2019-20.
  • Number of UDAN 'Seats and Departures': Helicopter operations will have a minimum of 5 and a maximum of 13 seats per flight. 

Check out the article on Indian national airways Here!

Salient features of the UDAN Scheme

The UDAN Scheme is designed with several innovative features to ensure its effectiveness and sustainability. Key features include:

  • Affordable Airfare Cap: Certain seats on each UDAN flight are offered at capped fares, making air travel more affordable for passengers.
  • Airline Subsidies: Airlines are provided with Viability Gap Funding (VGF) to cover the losses incurred on unprofitable regional routes.
  • Route Network Development: Focus on connecting unserved and underserved regions, with a special emphasis on difficult terrains like the North-Eastern states, hill states, and islands.
  • Public-Private Partnership: Encourages private players' involvement in developing regional airports and airstrips, enhancing infrastructure and services through public-private collaboration.

Also, read the National Electric Mobility Mission Plan.

Various Phases of the UDAN Scheme

The implementation of the UDAN Scheme is structured in phases, each aiming to expand the scope and reach of regional connectivity. The phases include:

  • UDAN 1.0: During this Phase, 5 airlines were given 128 flight routes to 70 airports, including 36 newly made operational airports.
  • UDAN 2.0: The Ministry of Civil Aviation identified 73 underserved and unserved airports in 2018. Helipads were also connected for the first time as part of phase 2 of the UDAN scheme.
  • UDAN 3.0: Tourism Routes are included in UDAN 3 in collaboration with the Ministry of Tourism. Seaplanes will be included to connect water aerodromes. Adding several routes in the Northeast Region to the UDAN network.
  • UDAN 4.0: To improve connectivity to remote and regional areas of the country, 78 new routes were approved under the 4th phase of the Regional Connectivity Scheme (RCS) – Ude Desh Ka Aam Nagrik(UDAN) in 2020.
  • UDAN 4.1: UDAN 4.1 is primarily concerned with connecting smaller airports and specific helicopter and seaplane connections. Sagarmala Seaplane Services is a large-scale project run by the Ministry of Ports, Shipping, and Waterways in collaboration with potential airline operators.
  • UDAN 5.1: The government launched UDAN 5.1 to improve connectivity in remote India using helicopters.

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Funding Structure

The funding structure of the UDAN Scheme is designed to make air travel viable and sustainable in remote areas through multiple financial mechanisms. Components include:

  • Viability Gap Funding (VGF): Supported by both the central and state governments, this funding is critical to bridging the financial gap for airlines operating on regional routes.
  • Airport Development and Operational Subsidies: Funds allocated for upgrading and operationalizing airports in regional and remote areas.
  • State Government Contributions: State governments provide additional funding for enhancing regional airport infrastructure and support services.

Achievements of the UDAN Scheme

Significant achievements include the operationalization of numerous new routes, development of several underserved and unserved airports, and a substantial increase in regional air traffic.

  • The UDAN scheme has successfully enhanced air connectivity to Tier-2 and Tier-3 cities, offering affordable airfares and revolutionizing travel.
  • The number of operational airports has increased from 74 in 2014 to 141.
  • Under the UDAN scheme, 68 underserved/unserved destinations, including 58 airports, 8 heliports, and 2 water aerodromes, have been connected.
  • With 425 new routes, UDAN has facilitated air connectivity to over 29 states and union territories.
  • More than one crore passengers have benefited from this scheme, availing its advantages.

Also, read about PM Kisan Samman Nidhi Yojana for the UPSC Exam here!

Significance of the UDAN Scheme

The UDAN Scheme plays a crucial role in enhancing regional connectivity, promoting inclusive economic development, and making air travel affordable for the common man.

  • The Ude Desh Ka Aam Nagrik(UDAN) Scheme allows passengers to fly to and from remote airports such as Hubballi and Baldota in Karnataka, Burnpur in West Bengal, Darbhanga in Bihar, Hissar in Haryana, and others.
  • The UDAN initiative helps India’s aviation business by allowing small and first-time operators to participate in the rapid development of passenger traffic.
  • Airlines must compete for exclusive rights to fly on the regional routes opened up by the scheme.
  • Robust regional connection is also expected to help the economy of the rural locations that make it into the country’s new aviation map.
  • While the plan aims to address the issue of phantom airports, it also provides cost savings on travel.
  • The scheme encourages airlines to launch new routes to underserved smaller cities and towns by giving Viability Gap Funding to make these operations economical.

Also, read the article on the Airports Authority of India here.

Challenges Associated with the UDAN Scheme

The UDAN Scheme faces challenges like limited passenger demand on regional routes, financial sustainability issues for airlines, and infrastructural constraints at smaller airports.

  • The poor financial health of many smaller regional carriers has hampered the scheme.
  • The routes were awarded under UDAN, but that doesn’t mean they’re viable or even remotely functional.
  • Many players only have one or two planes, which should be addressed more frequently. New planes need to be within reach for these smaller players.
  • The failure of UDAN is largely because it is a market-driven scheme, which requires the government to make the routes far more profitable for airline operators. 
  • Bids under UDAN are submitted based on the airline operator’s demand assessment for that specific route or route.
  • New planes need to be within reach for these smaller players. Smaller airlines must compete with larger airlines for pilots and other personnel, who must be paid on par with major carriers in the market, even though our slice of the pie is much smaller.

Key Takeaways for UPSC Aspirants

  • Full Form: Ude Desh ka Aam Nagrik (UDAN), a regional connectivity scheme launched by the Government of India.
  • Objective: To make air travel affordable and widespread by connecting underserved and unserved airports across India.
  • Launched: In 2016 under the Ministry of Civil Aviation.
  • Subsidies: Offers viability gap funding (VGF) to airlines to cover operational costs, ensuring lower fares for passengers.
  • Development Focus: Aims to develop regional air infrastructure by operationalizing a large number of airports, heliports, and water aerodromes.
  • Benefits: Enhances regional connectivity, thus contributing to economic growth, tourism, and the development of remote areas.
  • Phases: Implemented in multiple rounds (UDAN 1.0, 2.0, 3.0, etc.), each expanding the number of routes and geographical areas covered.
  • Impact: Significant increases in regional air traffic, improvement in ease of travel, and stimulation of local economies by boosting accessibility.

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UDAN Scheme UPSC FAQs

The UDAN scheme is a regional airport development and connectivity initiative by the Government of India aimed at making air travel affordable and enhancing regional connectivity.

The full form of the UDAN scheme is "Ude Desh ka Aam Nagrik."

The UDAN scheme was launched in April 2017.

The UDAN scheme is related to regional air connectivity and development of regional airports in India.

As per the latest information, the UDAN scheme aims to connect over 100 regional airports, including unserved and underserved airports.

The UDAN scheme is financed through a combination of central government, state government funds, and a small levy on domestic flights, providing Viability Gap Funding (VGF) to support airline operations on regional routes.

As of the latest update, more than 600 routes have been awarded under the UDAN scheme, with many already operational.

The Krishi Udan Scheme is an initiative by the Government of India aimed at boosting agricultural exports by providing air transportation for perishable agricultural products. Under this scheme, agricultural products like fruits, vegetables, and flowers are transported to international markets via air cargo, ensuring faster delivery and preserving freshness.
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