Govt to complete all signings of UDAN MoUs within three weeks: Union Aviation Minister Ram Mohan Naidu
The government plans to complete signing of state-level Memoranda of Understanding (MoUs) for the next phase of the UDAN regional connectivity scheme within two to three weeks
21 states had already signed MoUs with the Ministry of Civil Aviation as of the announcement, with the remaining state scheduled to sign shortly after
The scheme, having completed its first ten-year run, has been extended for another decade with a planned outlay of nearly ₹30,000 crore, which could double with contributions from states and other stakeholders, targeting an overall economic impact of up to ₹60,000 crore
The government aims for at least five domestic carriers to each operate a minimum fleet of 100 aircraft, aligned with the "Viksit Bharat 2047" vision of more than 350 operational airports
Airport construction timelines are to be compressed from an average gestation of three years to 18 months using a "challenge model" once work begins
UDAN (RCS-UDAN) — Origin, Objective, and Legal-Policy Basis
UDAN (Ude Desh ka Aam Naagrik, "let the common citizen of the country fly") is the Regional Connectivity Scheme (RCS) launched on October 21, 2016, under the National Civil Aviation Policy (NCAP), 2016. Its objective is to make regional air travel affordable and to connect underserved and unserved tier-2/tier-3 airports to the national aviation network.
Key Details
- Launched: October 21, 2016; first UDAN flight: Shimla-Delhi, April 2017
- Nodal ministry: Ministry of Civil Aviation; implementing framework rests on the National Civil Aviation Policy, 2016
- In its first decade, the scheme operationalised over 90 airports/airstrips/heliports and carried an estimated 1.54 crore passengers on subsidised routes
- Caps airfares on RCS routes (e.g., roughly comparable to an AC train fare for a one-hour flight segment) to make flying accessible to first-time flyers
The current MoU round is the operational mechanism for extending UDAN into its second decade — states must sign these MoUs to commit land, security, and concessions (like VAT reduction on ATF) that make new regional routes commercially viable under the scheme's funding model.
Viability Gap Funding (VGF) — the Scheme's Core Financing Instrument
Viability Gap Funding is a subsidy mechanism under which the government compensates airlines for a portion of the revenue shortfall on regional routes that are commercially unviable at capped fares, making it financially feasible for carriers to serve low-demand, tier-2/tier-3 routes.
Key Details
- VGF is funded through the Regional Connectivity Fund (RCF), financed by a levy on certain trunk-route domestic flights
- Centre-state VGF sharing ratio: 80:20 for most states; 90:10 for North-Eastern states and Union Territories, reflecting the government's greater fiscal support for connectivity in remote/hill regions
- VGF is route-specific and time-bound (typically for an initial number of years), intended to taper as a route matures commercially
- The Comptroller and Auditor General (CAG) has previously flagged implementation and fund-utilisation gaps in the scheme, relevant to accountability-in-governance angles for Mains
The ₹30,000 crore outlay announced for the scheme's second decade is primarily VGF and airport-infrastructure funding routed through this Centre-state cost-sharing architecture — the state MoUs currently being signed formalise each state's 20% (or 10%, for NE states) contribution.
Airport Infrastructure and the "Challenge Method" for Project Execution
Regional airport development under UDAN typically involves the Airports Authority of India (AAI) and state governments jointly developing "no-frills" airports at lower capital cost than major metro airports. The "challenge model" referenced here is a competitive/expression-of-interest-based mechanism used to fast-track site selection and construction compared to the conventional sequential planning process.
Key Details
- AAI is the statutory body (under the Airports Authority of India Act, 1994) responsible for managing and developing civil airport infrastructure in India
- Reducing average project gestation from three years to 18 months reflects a push toward parallel processing of clearances (environmental, security, land) rather than sequential approval
- The 350-airport target by 2047 aligns with the "Viksit Bharat @2047" vision document's infrastructure goals, distinguishing it from UDAN's original, more modest airport-revival target
- Fleet-expansion goals (five carriers x 100 aircraft) are a demand-side complement to the supply-side airport push, addressing aircraft availability constraints airlines have faced
The minister's fleet and airport targets frame UDAN's second decade as part of a broader civil aviation capacity build-out feeding into the Viksit Bharat 2047 vision, moving the scheme's emphasis from "connecting a fixed list of airports" toward sustained capacity expansion.
- UDAN launch date: October 21, 2016, under National Civil Aviation Policy, 2016
- States that signed MoUs (as of this announcement): 21, with completion targeted within 2-3 weeks
- Planned outlay for the scheme's second decade: nearly ₹30,000 crore (potentially doubling with state/stakeholder contributions)
- Projected economic impact: up to ₹60,000 crore
- VGF Centre:State sharing ratio: 80:20 (general states); 90:10 (North-Eastern states and UTs)
- First-decade achievement: over 90 airports operationalised, about 1.54 crore passengers served
- Fleet target: at least 5 domestic carriers with a minimum of 100 aircraft each
- Airport target under Viksit Bharat 2047: more than 350 operational airports
- Airport project gestation target: reduced from ~3 years to 18 months via the challenge model