Regional connectivity push: Aviation Ministry signs 21 agreements under UDAN next phase
The Civil Aviation Ministry signed 21 memorandums of understanding (MoUs) with states and Union Territories under the next phase of the UDAN (Ude Desh ka Aam Nagrik) Regional Connectivity Scheme.
The MoUs establish a structured framework for coordinated action between the Centre, states/UTs and the Airports Authority of India (AAI) to identify and develop aviation infrastructure aligned with regional priorities.
The next phase is built around four stated pillars: passenger affordability, operational sustainability of routes, a transparent "Challenge Mode" framework for nominating airstrips/helipads, and promotion of indigenously manufactured aircraft.
Since the scheme's launch, UDAN has operationalised 687 routes and 95 aerodromes, carrying about 1.71 crore passengers across 3.66 lakh flights; the new phase targets 120 additional destinations and 4 crore more passengers over the next decade.
Regional Connectivity Scheme (RCS)–UDAN
UDAN is the Regional Connectivity Scheme launched under the National Civil Aviation Policy (NCAP), 2016, to make regional air travel affordable and to connect underserved and unserved airports/airstrips to the national aviation network. Airlines bid to operate on identified routes; in exchange for keeping a share of seats at capped ("regional") fares, they receive Viability Gap Funding (VGF) to cover the difference between the cost of operations and likely revenue.
Key Details
- UDAN launched October 21, 2016 under NCAP 2016; first flight operated April 2017 (Shimla–Delhi)
- Scheme conceptualised with roughly a 10-year horizon to build regional connectivity infrastructure
- Airlines are awarded routes through a competitive bidding process and commit to fare caps and minimum seat quotas at subsidised rates in return for VGF support
- Aviation-sector employment cited alongside the scheme's growth: about 3 million (2014) to 7.7 million currently, with potential to reach 25 million by 2040
The 21 state/UT MoUs formalise the institutional machinery — Centre, states, and AAI acting jointly — through which the next phase of UDAN will identify and fund new routes and airport/airstrip upgrades, building on the base of 687 routes and 95 aerodromes already operationalised.
Viability Gap Funding (VGF) and the Regional Connectivity Fund (RCF)
VGF is the subsidy mechanism that makes commercially unviable regional routes attractive to airlines by covering the gap between the cost of operating a flight and the revenue it is expected to generate at capped fares. The Regional Connectivity Fund (RCF) was created specifically to finance VGF payouts under UDAN, funded through a levy on other (trunk) routes as well as budgetary support and state contributions.
Key Details
- VGF cost-sharing: 80% borne by the Central Government, 20% by the concerned state/UT government
- For States in the North-Eastern Region and Union Territories, the sharing ratio is more favourable to the sub-national unit: 90% Centre, 10% State/UT
- RCF corpus draws on a levy applied on other domestic routes, alongside government budgetary allocation
- Fare caps under UDAN are designed to make roughly a one-hour regional flight cost comparable to an AC train fare on the same route
The next phase's emphasis on "operational sustainability" and a new "Challenge Mode" is a response to past criticism (including CAG findings) that many UDAN routes became commercially unviable once VGF support tapered, leading to route suspensions — the state-level MoUs and revised funding architecture aim to address this recurring weak spot.
Cooperative Federalism and the Role of the Airports Authority of India (AAI)
Airport and aviation infrastructure sits at the intersection of Union and State jurisdiction — the Centre regulates civil aviation and airports (a Union List subject), while land acquisition, local infrastructure and law and order support fall to states. The Airports Authority of India, constituted under the Airports Authority of India Act, 1994 (in force from April 1, 1995, merging the erstwhile National Airports Authority and International Airports Authority of India), is the Central executing agency for airport development, air traffic management and air navigation services.
Key Details
- Airports Authority of India Act, 1994 — merged National Airports Authority and International Airports Authority of India into a single AAI, effective April 1, 1995
- AAI's core functions: managing airports, air traffic management (ATM), air navigation services, and infrastructure development, including in tier-2/tier-3 cities under UDAN
- Civil aviation and airports fall under the Union List (List I, Seventh Schedule), but regional connectivity execution requires state cooperation on land, security and local logistics — hence the MoU-based model
- "Challenge Mode" allows state governments to proactively nominate airstrips/helipads for development based on local demand, rather than routes being identified only centrally
The 21 MoUs operationalise this Centre-state-AAI division of labour for UDAN's next phase, giving states a formal channel (Challenge Mode nominations) to shape which local airports and helipads get prioritised for development.
- MoUs signed under UDAN's next phase: 21, with states and Union Territories
- UDAN launched: October 21, 2016, under NCAP 2016; first flight: April 2017 (Shimla–Delhi)
- Cumulative achievement: 687 routes, 95 aerodromes operationalised; ~1.71 crore passengers carried across 3.66 lakh flights
- Next-phase targets: 120 new destinations; 4 crore additional passengers over the next decade
- VGF cost-sharing: 80:20 (Centre:State) generally; 90:10 for North-Eastern states/UTs
- Aviation-sector employment: ~3 million (2014) → 7.7 million (current) → projected up to 25 million by 2040