Centre to select first 50 airports under modified UDAN scheme
States and union territories have been asked to nominate unserved and underserved airports for development under the first tranche of the Regional Connectivity Scheme – Modified UDAN
The Centre will evaluate state nominations under a "Challenge Mode" framework before finalising the first 50 airports for development
This marks the operational start of the 10-year Modified UDAN roadmap approved by the Union Cabinet, running from FY 2026-27 to FY 2035-36
The selected airports will be developed from existing unserved airstrips as part of a wider plan targeting around 100 airports over the scheme period
Regional Connectivity Scheme (UDAN) — Origin and Structure
UDAN (Ude Desh ka Aam Nagrik) is the Regional Connectivity Scheme launched under the National Civil Aviation Policy, 2016 to make air travel affordable and to develop unserved and underserved airports, primarily in Tier-2 and Tier-3 towns. The scheme uses Viability Gap Funding (VGF) to subsidise airlines on routes that would otherwise be commercially unviable.
Key Details
- Launched October 21, 2016 under the National Civil Aviation Policy, 2016; nodal implementing agency is the Airports Authority of India (AAI)
- VGF is funded through the Regional Connectivity Fund (RCF), to which partner state governments contribute 20% (10% for North-Eastern and Himalayan states and Union Territories), with the Centre bearing the balance
- The RCS fare cap on subsidised seats has historically been applied to a defined share of seats per flight (up to 50% of seats, capped at 40 seats per aircraft), keeping select seats affordable while leaving the rest at market pricing
- Over roughly nine years since launch, the scheme has operationalised several hundred routes across airports, heliports, and water aerodromes, carrying over a crore and a half of passengers, per official data
The airport selection announced now is the execution phase of a relaunched, larger version of this original 2016 scheme, applying the same VGF and state-cost-sharing logic to a fresh set of unserved airports.
Regional Connectivity Scheme – Modified UDAN (2026 Relaunch)
The Union Cabinet approved a relaunch of the scheme as "Regional Connectivity Scheme – Modified UDAN" for a 10-year period, FY 2026-27 to FY 2035-36, with a total outlay of ₹28,840 crore funded through budgetary support. It aims to develop new airports from existing unserved airstrips, expand helipad connectivity in remote, hilly, North-Eastern, and island regions, and align with the government's long-term Viksit Bharat 2047 infrastructure goals.
Key Details
- Approved outlay: ₹28,840 crore over 10 years (FY 2026-27 to FY 2035-36)
- Target: development of around 100 airports from existing unserved airstrips over the scheme period
- State government obligations under the scheme include providing land, concessional utilities (power and water), free security and fire-fighting services, and capping Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) at 1% to reduce airline operating costs
- Nodal ministry: Ministry of Civil Aviation; implementing agency continues to be the Airports Authority of India
The current call for state nominations of the "first 50 airports" is the opening tranche within this larger 100-airport, 10-year, ₹28,840-crore roadmap approved by the Cabinet.
Challenge Mode — A Demand-Verification Shift in Route/Airport Selection
"Challenge Mode" is the selection mechanism under which airport candidates are identified based on demonstrated readiness and demand rather than purely on airline-submitted commercial bids, addressing a recurring problem in earlier UDAN rounds where routes were awarded to airlines but not sustained in operation.
Key Details
- Under Challenge Mode, states nominate airport candidates and must demonstrate land availability, infrastructure readiness, and facilitation commitments (utilities, security, fire services, ATF VAT cap) before the Centre evaluates and finalises selections
- This differs from the original RCS-UDAN bidding rounds, where interested airlines submitted route proposals based on their own commercial demand assessment, a process criticised for routes being awarded but subsequently under-utilised or discontinued
- The Challenge Mode approach shifts initial demand identification to airport operators, state authorities, and regional stakeholders before airline route bidding is invited
The Centre's evaluation of state-nominated airports under Challenge Mode, referenced in this announcement, is intended to filter for infrastructure- and demand-ready airports before committing VGF subsidy, reducing the risk of routes lapsing as seen under earlier UDAN cycles.
- Original UDAN launch: October 21, 2016, under National Civil Aviation Policy, 2016
- Modified UDAN approval: 10-year scheme, FY 2026-27 to FY 2035-36
- Modified UDAN total outlay: ₹28,840 crore
- First tranche under selection: 50 airports (out of a broader ~100-airport target)
- RCF state contribution: 20% (10% for NER/hilly states and UTs); Centre bears the remainder
- ATF VAT cap required of participating states: 1%
- RCS subsidised-seat cap (historical norm): up to 50% of seats per flight, maximum 40 seats
- Nodal ministry: Ministry of Civil Aviation; implementing agency: Airports Authority of India (AAI)