The UDAN Scheme is the main component of the Prime Minister Narendra Modi’s National Civil Aviation Policy (NCAP) which was released by the Ministry of Civil Aviation (India) on June 15, 2016. The program will be combined funded by the central government and state governments, several states have come on board by signing the “Memorandum of Understanding” with the union government for this scheme. UDAN RCS will connect the unspecified value of new regional routes, by operating 100 regional airports by the end of 2018-2019 financial years, with an aim of 13 lakh (1.3 million) annual passenger seats, requiring annual INR200 crore Viability Gap Funding (VGF). The rate of occurrence of flights must be minimum 3 and maximum of 7 per week from the same airport.
India has 394 unvisited and 16 underserved airports; out of a total of these 410 potential-target unvisited and underserved regional airports, INR4500 Crore has been officially accepted in 2016-2017 union budget to revive and further develop 50 airports in the smaller regional towns between 2017-2020, 15 airports during 2017-18, another 15 airports during 2018-19, and 20 more airports during 2019-20. A total of 75 airports were now in working status for the civilian flights in India since independence, government has newly started to operate additional 36 regional airports for the civilian flights including 3 civil enclaves within army airports, with well-organized scheduled flights, within the single financial year of 2016-2017, with the target to complete sum total of 50 operational regional airports by the end of 2018-2019, and eventually are operating a cumulative total of 100 regional airports by December 2018.
Prime minister of India Narendra Modi introduced the scheme on 27 April 2017 by flagging off the inaugural regional flights between Delhi and Shimla, and also between Kadapa-Hyderabad-Nande
Currently, more than 100 underserved (no more than 7 scheduled flights per week) and unserved regional airports will be developed by December 2018, for which the first funding of ₹45,000 million (US$630 million or €540 million) for the improvement of 50 regional airports was approved in May 2017. Around 70 airports included in round-I, 43 are regional airports to be newly operating, RCS- Ude Desh ka Aam Naagrik operations have started from 13 regional airports and additional 12 regional airports are ready to receive flights, 18 regional airports still require a significant upgrade (November 2017).
The Second component is to add hundreds of financially-viable capped-airfare new regional flight course to connect more than 100 underserved and unvisited airports in smaller towns with each other as well as with well-served airports in bigger cities by using “Viability Gap Funding” (VGF) where required. Initially, three separate rounds of bidding for the award of routes will be concluded by the end of 2018. Union government share of “Viability Gap Funding” is from the cess applied to flights to popular routes to main cities and respective state governments have also offered an additional advantage to the flight operators to make UDAN-RCS viable.
For the fixed-wing aircraft there is a limit of maximum fare of INR2,500 per hour of flight for the 50% of the seats (min 9 RCS seats and max 40 RCS seats per fastened-wing flight, and max 12 helicopter RCS seats per chopper flight), joining unserved and underserved regional airports, remaining 50% seats will be priced at market rate. Capped RCS rates will also be graded based on distance, e.g. INR1,420 for a distance of 151–175 km, INR1,500 for a distance of 176–200 km, and so on, with a capping of maximum INR3,500 fare for a total distance of 800 km or more.