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Modified UDAN (Viksit UDAN) 2026: ₹28,840 Crore Plan to Transform Regional Aviation
Key Takeaways (Prelims Catalyst)
- Scheme Name: Regional Connectivity Scheme – Modified UDAN (Viksit UDAN)
- Approval Date: March 2026 by Union Cabinet
- Duration: 10 years (FY 2026–27 to FY 2035–36)
- Total Outlay: ₹28,840 crore
- Core Problem Fixed: Original UDAN’s 3-year VGF cliff led to 327 routes becoming disused
- Key Innovation: 5-year tapered VGF instead of 3-year full support
- Major Components:
- ₹10,043 crore for Viability Gap Funding (VGF)
- ₹12,159 crore for developing 100 airports (Challenge Mode)
- ₹2,577 crore for Operation & Maintenance (O&M) support
- ₹3,661 crore for 200 helipads in remote areas
- Direct Budgetary Support: Funding comes directly from the Government of India (not from a levy on mainline tickets)
- Indigenous Push: Mandatory induction of HAL Dornier 228 and Dhruv helicopters
Table of Contents
Introduction: Why Modified UDAN Matters
In March 2026, the Union Cabinet approved the Modified UDAN (Viksit UDAN) scheme — a ₹28,840 crore, 10-year masterplan to transform regional air connectivity in India. This is not a simple extension of the 2016 UDAN scheme. It is a complete structural overhaul designed to fix the fundamental flaws that caused hundreds of regional routes to collapse after the original 3-year subsidy period ended.
1. The Problem with Original UDAN
The original UDAN scheme (launched in 2016) was highly successful in its initial phase. It operationalized 663 routes and revived 95 airports. However, it suffered from a critical design flaw:
- 3-Year VGF Cliff: Viability Gap Funding was provided only for a maximum of 3 years.
- Sudden Fare Hike: After 3 years, airlines had to raise fares sharply to cover real costs, causing passenger demand to collapse.
- Route Abandonment: As a result, 327 out of 663 routes became disused, and 15 airports shut down operations entirely by early 2026.
The Modified UDAN scheme directly addresses this “sustainability gap” with longer support and direct funding mechanisms.
2. The 5 Pillars of Modified UDAN
Pillar 1: 5-Year Tapered Viability Gap Funding (₹10,043 crore)
- Subsidy window extended from 3 years to 5 years.
- VGF is tapered from Year 3 onwards, forcing airlines to gradually increase fares or improve efficiency.
- Route exclusivity limited to 3 years to encourage competition after the market stabilizes.
Pillar 2: CAPEX for 100 Airports (₹12,159 crore)
- Focus on brownfield development — upgrading existing disused airstrips rather than building new greenfield airports.
- Development through “Challenge Mode”: States compete by offering land, clearances, and concessions (free electricity, water, reduced VAT on ATF).
Pillar 3: Operation & Maintenance (O&M) Support (₹2,577 crore)
- Direct subsidy to cover fixed costs of low-traffic airports (fire services, security, ATC, maintenance).
- ₹3.06 crore per year for normal airports and ₹0.90 crore for heliports/water aerodromes.
- Support provided for 3 years to help airports reach break-even.
Pillar 4: 200 Helipads for Remote Areas (₹3,661 crore)
- Focus on Himalayas, Northeast, and island territories where fixed-wing operations are difficult.
- Modern helipads with night-landing facilities for medical evacuation, disaster relief, and tourism.
Pillar 5: Indigenous Aircraft Induction
- Mandatory use of domestically manufactured aircraft for state operators:
- HAL Dornier 228 (19-seater) for Alliance Air
- HAL Dhruv helicopters for Pawan Hans
- Aligns with Atmanirbhar Bharat in aerospace manufacturing.
3. Financial Breakdown
| Component | Focus Area | Outlay (₹ Crore) |
|---|---|---|
| CAPEX | Development of 100 Airports | 12,159 |
| VGF | Viability Gap Funding for Airlines | 10,043 |
| Helipads | 200 Modern Helipads | 3,661 |
| O&M Support | Operation & Maintenance of Airports | 2,577 |
| Total | 10-Year Plan | 28,840 |
Practice MCQs for UPSC, SSC & State PSC
Q1. What is the total outlay of the Modified UDAN scheme approved in March 2026?
Options:
A) ₹15,000 crore
B) ₹20,000 crore
C) ₹28,840 crore
D) ₹35,000 crore
Answer: C) ₹28,840 crore
Explanation: The Modified UDAN (Viksit UDAN) scheme has a total budgetary outlay of ₹28,840 crore for 10 years.
Q2. What was the biggest flaw in the original UDAN scheme?
Options:
A) Lack of airports
B) Only 3-year Viability Gap Funding leading to route abandonment
C) No focus on the Northeast
D) Excessive government control
Answer: B) Only 3-year Viability Gap Funding leading to route abandonment
Explanation: The original scheme provided VGF for only 3 years. After that, airlines raised fares sharply, causing demand to collapse and hundreds of routes to shut down.
Q3. Under Modified UDAN, for how many years is Viability Gap Funding provided?
Options:
A) 3 years
B) 4 years
C) 5 years (with tapering from Year 3)
D) 7 years
Answer: C) 5 years (with tapering from Year 3)
Explanation: The new scheme extends VGF to 5 years with gradual tapering from the third year to help airlines transition to market pricing.
Q4. What does “Challenge Mode” mean in the context of Modified UDAN?
Options:
A) Airlines compete to bid for routes
B) States compete to get their airstrips selected for development by offering concessions
C) Passengers compete for subsidized tickets
D) A new type of aircraft competition
Answer: B) States compete to get their airstrips selected for development by offering concessions
Explanation: Under Challenge Mode, state governments bid by guaranteeing land, clearances, and concessions like free electricity and reduced VAT on ATF.
Q5. How many helipads are planned to be developed under the Modified UDAN scheme?
Options:
A) 50
B) 100
C) 200
D) 500
Answer: C) 200
Explanation: The scheme includes development of 200 modern helipads, especially in hilly, remote, and island regions where fixed-wing operations are difficult.
Q6. Which of the following aircraft is being inducted under the Atmanirbhar Bharat push in Modified UDAN?
Options:
A) Airbus A320
B) HAL Dornier 228
C) Boeing 737
D) ATR 72
Answer: B) HAL Dornier 228
Explanation: The scheme mandates induction of HAL Dornier 228 (19-seater) for Alliance Air and HAL Dhruv helicopters for Pawan Hans to promote indigenous aerospace manufacturing.
Q7. What is the main source of funding for the Modified UDAN scheme?
Options:
A) Levy on tickets of major routes
B) Direct budgetary support from the Government of India
C) Private sector investment only
D) World Bank loan
Answer: B) Direct budgetary support from the Government of India
Explanation: Unlike the original scheme, Modified UDAN is funded through direct budgetary support, removing dependence on a levy on profitable mainline routes.
Frequently Asked Questions
What is Modified UDAN (Viksit UDAN)?
It is a ₹28,840 crore, 10-year regional connectivity scheme approved in March 2026. It aims to make regional air travel sustainable by extending Viability Gap Funding to 5 years, developing 100 airports, building 200 helipads, and providing direct O&M support to airports.
Why was the original UDAN scheme not sustainable?
The original scheme provided Viability Gap Funding for only 3 years. After the subsidy ended, airlines raised fares sharply, causing passenger demand to collapse. As a result, 327 routes became disused.
What is “Challenge Mode” in Modified UDAN?
Challenge Mode is a competitive process where state governments bid to get their airstrips selected for development under the scheme by offering land, clearances, and concessions such as free electricity and reduced VAT on ATF.
How many helipads will be developed under the scheme?
The Modified UDAN scheme includes the development of 200 modern helipads, primarily in remote, hilly, and island regions where fixed-wing aircraft operations are difficult.
Which indigenous aircraft are being promoted under Modified UDAN?
The scheme promotes the induction of HAL Dornier 228 (19-seater turboprop) for Alliance Air and HAL Dhruv helicopters for Pawan Hans, in line with the Atmanirbhar Bharat initiative.
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