Ministry of Civil Aviation

Regional Connectivity Scheme (RCS) – UDAN (Ude Desh ka Aam Nagrik)

1. Nodal Ministry & Department

• • Ministry: Ministry of Civil Aviation.
  • Implementing Agency: Airports Authority of India (AAI) is the designated Nodal Agency.

2. Context

• • Launch: Originally launched in October 2016 for a 10-year period.
  • Rationale: To make air travel affordable and widespread, ensuring “the common man can fly” by connecting unserved and underserved airports.
  • 2026 Update: The Union Budget 2026-27 increased the allocation for UDAN by 27% to ₹550 crore. A major pivot in 2026 is the introduction of a dedicated Viability Gap Funding (VGF) scheme for Seaplanes to enhance last-mile connectivity in island and coastal territories.

3. Objectives

• • To develop the regional aviation market by making flying affordable on tier-2 and tier-3 routes.
  • To provide connectivity to unserved (no operations) and underserved (fewer than 7 flights/week) airports.
  • To stimulate infrastructure development and job creation in remote regions.

4. Type of Scheme

• • Central Sector Scheme.

5. Target Beneficiaries

• • General public (through capped airfares).
  • Regional Airlines and Helicopter operators.
  • Tourism and logistics sectors in remote areas.

6. Eligibility Criteria

• • Airlines: Must be a Scheduled Operator (or Non-Scheduled for specific categories) with a valid permit.
  • Routes: Bids are invited for routes connecting unserved/underserved airports or heliports.
  • Fare Cap: Applies to 50% of the seats (or a minimum of 9 and maximum of 40 seats) on a flight.

7. Key Features/Provisions

• • Airfare Cap: Fares are capped at ₹2,500 for one hour of flight for approximately 500 km.
  • Viability Gap Funding (VGF): Financial support provided to airlines to bridge the gap between operating costs and capped fares.
  • VGF Sharing: Shared between the Center and States (80:20 for general states; 90:10 for NE/Himalayan states/UTs).
  • Concessions: Reduced VAT on ATF (1% or less), waiver of Landing/Parking charges, and RCF (Regional Connectivity Fund) levy on trunk routes to fund VGF.
  • Special Focus Areas:
    • Lifeline UDAN: For essential medical/cargo transport.
    • Krishi UDAN: For transporting agri-perishables.
    • International UDAN: Connecting select state capitals with international destinations (e.g., Guwahati to Bangkok).
    • UDAN 5.3 (2026 Focus): Special focus on Seaplanes and Water Aerodromes (48 routes proposed).

8. Budgetary Allocation & Performance (Updated March 2026)

• • Allocation: ₹550 crore for FY 2026-27 (up from ₹434 crore in 2025-26).
  • Performance: Over 160 airports/heliports/water aerodromes have been developed/revived.
  • Passenger Traffic: Surpassed 1.5 crore cumulative passengers by early 2026.