UDAN scheme: Govt expects Rs300 crore annually from levy on airlines

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The government expects to collect around Rs300 crore annually from the levy on airlines flying on major routes towards the regional connectivity scheme, a senior official said.


  • To partly raise money for viability gap funding requirement under the UDAN (Ude Desh ka Aam Naagrik) regional connectivity scheme, the civil aviation ministry has been collecting the levy since December 2016.
  • More routes are getting added under the UDAN scheme, which seeks to connect underserved and under-served airports as well as making flying more affordable.
  • With increasing number of UDAN routes, the ministry is also preparing to deal with higher funding needs in the coming months.
  • A senior ministry official said the response to UDAN flights has been very positive and many routes are having good occupancy. Every year, the ministry expects to garner Rs280 crore to Rs300 crore by way of levy collected from airlines flying on major routes.
  • Every year, the ministry expects to garner Rs280 crore to Rs300 crore by way of levy collected from airlines flying on major routes.
  • An amount of Rs5,000 is levied for each departure of flights on major routes. Initially, the levy was Rs8,500 and was subsequently reduced.
  • To fund the ambitious UDAN regional connectivity scheme, the civil aviation ministry is collecting a levy of Rs5,000 per departure from airlines operating in major domestic routes, including Mumbai and Delhi. With at least half of the seats in UDAN flights offered at subsidised fares, the participating carriers will be provided a certain amount of viability gap funding (VGF)—an amount shared between the Centre and the states concerned.
  • All the five operators—Alliance Air, SpiceJet, TruJet, Air Deccan and Air Odisha—that won routes in the first round of bidding under UDAN have already commenced operations. IndiGo and Jet Airways are among the airlines that have won routes in the second round of bidding and are yet to start services under the scheme.
  • The allocation for UDAN scheme has been substantially raised to Rs1,014.09 crore for the next financial year. The same was at Rs200.11 crore for 2017-18 fiscal.

All you wanted to know about…UDAN

When the civil aviation ministry first announced the UDAN scheme for regional air connectivity in 2017, many were sceptical about whether it would take off. Not only has UDAN got off the ground, successfully connecting 16 new regional airports in the first round of bids.

What is it

  • UDAN(Ude Desh Ka Aam Nagrik) is the Government’s initiative to make air travel to India’s tier II and tier III cities affordable to the aam aadmi.
  • The idea is to put smaller cities and remote regions on the aviation map, by getting domestic airlines to ply more regional routes.
  • Under the scheme, the Government offers incentives to airlines to flag off new flights to neglected smaller cities and towns by providing Viability Gap Funding to make these operations profitable.
  • Airlines are required to bid for exclusive rights to fly on the regional routes opened up under the scheme. They must sell a specific number of seats on each flight at a fixed fare of ₹2,500 for one hour of flying. In the case of helicopter operations, allowed for the first time now, fares are capped at ₹2,500 for a 30-minute flight.

Why is it important

  • After the second round of bidding in UDAN, air travellers can now fly with known names such as Jet Airways, IndiGo and Pawan Hans to far-flung places. In all, 109 regional airports and heliports have been connected.
  • The second round saw several tier 2 and tier 3 cities such as Kargil in J&K join the network. Besides these airports, 14 helipads in Uttarakhand, eight in Arunachal Pradesh, six in Himachal Pradesh, five in Manipur and four in Assam have been pressed into service in UDAN 2, making it easier for people in these regions to fly to other cities.
  • This should happen within six months as operators have to start services within this time-frame after the award of contract, subject to the Airports Authority of India getting the airport/heliport ready.
  • The scheme gives India’s aviation sector a boost by giving a chance to small and first-time operators to be a part of the rapid growth in passenger traffic.
  • These two rounds of bidding have seen newer players such as Heritage Aviation, Maritime Energy Heli Air Services, Turbo Aviation, Zoom Air and Pinnacle winning bids to operate flights. Robust regional connectivity is also expected to deliver an economic boost to the remote locations that make it to the country’s new aviation map.

Q.1 Which of the following statements are correct with respect to UDAN (Ude Desh ka Aam naagrik) Scheme-

  1. The UDAN RCS (Regional Connectivity Scheme) was launched in October 2016 to develop the regional aviation market.
  2. It’s aims to make flying affordable by providing connectivity to un-served and under-served airports of the country through revival of existing airstrips and airports so that persons in regional towns are able to take affordable flights.
  3. It is applicable on flights covering distance between 200 km and 800 km with no lower limit set for hilly, remote, island and security sensitive regions.

Choose the correct from the above

  1. 1 only
  2. 2 and 3 only
  3. 1 and 2 only
  4. All of the above

Answer: d.) all of the above


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