Revamp of Udan Scheme
The Cabinet has approved a proposal worth ₹28,840 crore to enhance regional air connectivity, marking a sixfold increase in allocation under the existing Udan (Ude Desh ka Aam Nagrik) scheme.
- The scheme subsidizes airlines flying to remote destinations with fares capped by the government.
- Performance Challenges:
- Of the 649 routes launched, only about half remain operational as some airlines ceased flights after the three-year subsidy period.
Funding and Financial Support
- Viability Gap Funding:
- 80% sourced from a ₹6,500 levy on each metro flight.
- State governments cover the remaining cost.
- Government subsidies disbursed: Over ₹4,300 crore.
- Investment in airport development: Around ₹4,700 crore since 2017.
Revamped Scheme Details
- Extension of subsidy period from three to five years:
- 100% subsidy support for the first two years, tapering in the subsequent three years.
- Additional allocation of ₹2,577 crore for airport maintenance in early years to support airports with limited revenue and high costs.
- Airlines have a three-year exclusivity on routes, protecting them from competitive pressures.
- Incentives for remote airports:
- Lower tax on aviation turbine fuel and no airport fees.
Challenges for Smaller Airlines
- Difficulty in acquiring slots at major airports, hindering network development.
- Financial burdens due to non-availability of aircraft or airport readiness.
Union Minister Ashwini Vaishnaw highlighted the need for extending the subsidy period after discussions with airlines to support smaller airlines in building viable networks.
