UDAN (Ude Desh ka Aam Naagrik) is a market-driven initiative aiming to connect underserved and unserved airports by inviting airlines to bid on these routes. Regular bidding rounds are held to expand the network of destinations under the scheme. Airlines, assessing the demand on specific routes, submit their proposals during these bidding rounds.

Airports included in awarded UDAN routes that need upgrades for operational commencement are developed under the ‘Revival of unserved and underserved airports’ scheme. Once development is complete, Selected Airline Operators (SAOs) start operations on these routes. Financial support through Viability Gap Funding (VGF) is provided to cover any shortfall between operational costs and expected revenue.

So far, 12 bidding cycles across five rounds of UDAN have taken place. Some routes awarded under UDAN that were discontinued before the completion of their 3-year term are now open for re-bidding in UDAN Round 5.3.

Occasional delays in operationalizing airports can occur due to:

• Land availability issues.
• Technical and operational challenges at certain airports.
• Delays in obtaining permits for new airlines.
• Problems such as lack of suitable aircraft, leasing issues, and maintenance of small aircraft.

SAOs receive various concessions from the Central Government, State Governments, and airport operators, including:

Airport Operators:

• No Landing and Parking Charges on RCS Flights.
• No Terminal Navigation Landing Charges (TNLC) by AAI on RCS Flights.
• Discounted Route Navigation and Facilitation Charges (RNFC) at 42.50% of normal rates.
• Permission for SAOs to self-handle ground operations at all airports under the scheme.

Central Government:

Excise Duty on Aviation Turbine Fuel (ATF) at 2% for three years from the scheme's notification date.
Freedom for SAOs to enter into code-sharing agreements with domestic and international airlines.
State Governments:

Reduce VAT on ATF to 1% or less for ten years at RCS Airports within their states.
Provide necessary land free of cost for RCS Airport development.
Offer security and fire services free of charge at RCS Airports.
Supply electricity, water, and other utilities at significantly reduced rates at RCS Airports.

So far, Rs. 3587 crores have been disbursed to SAOs as Viability Gap Funding under the scheme's provisions.

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