Budget 2025: Centre Trims Allocation For UDAN Scheme By 32.5%

The budgetary allocation for the regional air connectivity scheme — UDAN or Ude Desh Ka Aam Nagrik — has been slashed by 32.5% even as government extended the scheme beyond its original 10-year period.

The government has set aside Rs 540 crore for the UDAN scheme, lower from the previous estimate of Rs 800 crore.

This funding, which is spent on reviving unused and underused airports in tier-2 and tier-3 cities, marks the second consecutive year of reduced allocations and comes after the scheme received its highest-ever funding of Rs 1,244 crore for the fiscal year 2022-23 since its inception in 2017. The lower allocation comes amid muted passenger traffic under the scheme in recent years.

Overall, the allocation for the civil aviation ministry has been cut by nearly 10% to Rs 2,400.31 crore for the next financial year.

Union Finance Minister Nirmala Sitharaman in her budget speech on Saturday said that the government will launch a modified UDAN scheme to connect 120 more destinations to help 4 crore additional passengers in the next decade. Under the scheme, the minister said that 619 routes connecting 88 airports, including two water aerodromes and 13 heliports, have been operationalised so far, benefitting 1.5 crore passengers.

The minister added that the government will also facilitate the development of new greenfield airports in Bihar. 

Under the scheme, the government caps airfares and offers incentives to encourage airlines to serve underutilised routes. Eight years on, however, the scheme has had a mixed response, with only about 60% of the original 619 routes operational.

Data from the Airports Authority of India reveal that several airports developed under the scheme, such as Pakyong in Sikkim, Solapur and Sindhudurg in Maharashtra, and Kushinagar in Uttar Pradesh, currently have no flights. A 2023 audit by the Comptroller and Auditor General revealed that Rs 5.19 crore allocated for the Kushinagar terminal building remains unused since its completion.

"The budget announcements on UDAN scheme is set to transform air connectivity," SpiceJet chairman and managing director Ajay Singh told NDTV Profit. "SpiceJet has been one of the most ardent supporters of UDAN and we will expand significantly our footprint under the scheme."

Bangalore-based regional carrier Star Air also revealed plans to expand its fleet to 14 aircraft by March from current nine, increasing its network to over 100 flights. "Ensuring sustainability in regional connectivity is essential for long-term success," said CEO Simran Singh Tiwana. "The success of this expansion will depend on the execution of new routes and a stronger focus on helping airlines manage operational costs more efficiently.”

Civil Aviation Minister K. Rammohan Naidu informed Parliament last August that the government is addressing the issue of airlines ceasing operations on regional routes after subsidies ended. "A specific situation has arisen and airlines are backing away... after three years. We will address this issue,” Naidu had said, adding that the government will tweak the RCS norms so that after one year the routes can be bid for again.