Government revamps UDAN scheme, extends subsidy for regional routes
The Union Cabinet has approved a revamped UDAN (Ude Desh ka Aam Naagrik) scheme with a total outlay of ₹28,840 crore. A significant policy shift extends the subsidy period for airlines on select Tier-2 and Tier-3 regional routes from three to five years. This change addresses the high rate of discontinued routes (327 out of 663 launched) after the previous three-year subsidy cap. The funding mechanism will also shift from a levy embedded in airfares on non-UDAN routes to direct funding from the exchequer, aiming to make more regional routes viable.
Key Points
- The Union Cabinet approved a modified UDAN scheme with a total outlay of ₹28,840 crore.
- The subsidy period for airlines operating on select Tier-2 and Tier-3 regional routes has been extended from three to five years.
- The funding mechanism for subsidies will shift from a Regional Connectivity Scheme (RCS) levy on non-UDAN airfares to direct funding from the exchequer.
- The revamp aims to improve the viability of regional routes, as a previous CAG report found only 7-10% remained viable beyond the three-year subsidy.
- As of February 2026, 327 out of 663 routes launched under UDAN since 2017 had been discontinued.
Exam Facts
- Total outlay for modified UDAN scheme: ₹28,840 crore.
- Subsidy period extended from three to five years for Tier-2 and Tier-3 routes.
- ₹10,043 crore set aside for subsidy over the next 10 years.
- As of February 2026, 327 of 663 UDAN routes launched since 2017 were discontinued.
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