The Centre is expected to boost the fast-growing civil aviation sector by reviving more airports under the brand new iteration of the regional connectivity scheme UDAN in the upcoming Union Budget.
As per industry insiders, Union Finance Minister Nirmala Sitharaman might propose allocation for “UDAN (Ude Desh ka Aam Naagrik) 2.0” scheme, which aims to support last-mile connectivity through the development of cost-effective airport infrastructure.
In the union budget FY25, the Centre had earmarked ₹502 crore for the UDAN scheme. This amount was lower than the revised estimate of ₹850 crore and the budget estimate of ₹1,244.07 crore for FY24.
Higher allocation
However, the allocation for the new scheme might be higher in the upcoming Budget, said industry insiders, citing that the new iteration is expected to lay the foundation for the Centre’s plan to increase the number of operational airports to 350-400 by 2047.
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Notably, the new iteration of the scheme, unofficially known as “UDAN 2.0,” intends to provide a cost-effective means to develop and operate over 100 underutilised airstrips in the country.
As of now, the Ministry of Civil Aviation (MoCA) has operationalised over 85 aerodromes—comprising airports, heliports, and water aerodromes under the scheme.
Reducing costs
Besides, the scheme proposes to reduce the running cost of small regional airports and advance landing grounds (ALGs). Estimates show that running operations at small airports or ALGs costs around ₹7 to ₹10 crore per annum.
Apart from reducing expenses, the new scheme will look at ways to ease operational regulations so that airlines or helicopter operators can start flights to last-mile destinations while offering affordable fares.
The scheme emphasises various ways to ease the entry barriers for new airlines, helicopters, seaplanes, and light aircraft operators. The cost element, industry insiders added, is the single biggest entry barrier for new players to enter the segment.
As of now, the market-driven model of the first UDAN scheme allowed airlines to assess demand on specific routes and submit proposals during bidding rounds. It incentivises airlines to connect underserved regions by offering them support through Viability Gap Funding (VGF) and various concessions provided by airport operators, the Central, and State governments.
Since its inception, the scheme has facilitated the travel of over 1.44 crore passengers across more than 2.8 lakh flights.
The scheme has operationalised 601 routes, including helicopter routes, while the number of operational airports in the country has doubled from 74 in 2014 to more than 157 in 2024.
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