UDAN aims to connect Tier-2 and Tier-3 cities and underserved regions of India with major cities, boosting regional connectivity and economic development.

Key Features of the UDAN (Ude Desh Ka Aam Nagrik) Scheme 

• Launch: In Oct, 2016 under National Civil Aviation Policy 2016 with a market-driven yet financially supported model.
• Type: Central sector scheme
• Goal: Boost air connectivity and infrastructure in remote/underserved areas; make flying affordable.
• Benefits 
  • Subsidized seats for passengers: Travel fee is capped (initially it was capped to Rs.2500- per passenger).
  • Support to Airlines:  Government compensates in the form of Viability Gap Funding (VGF) to airlines for losses due to low fares.
• Funding Mechanism: Regional Connectivity Fund (RCF), financed by levies on select domestic flights, facilitates self-financing mechanism of scheme by funding VGF.
• Implemented By:  Ministry of Civil Aviation

Challenges in implementing UDAN Scheme:

• Financial Sustainability & VGF Dependence: Heavy reliance on subsidies; airlines struggle to break even on low-demand routes.
• Infrastructure Deficiencies: Many regional airports lack terminal capacity, navigational aids, runway length, ATC systems, and ground services 
• Operational Hurdles: High operating costs due to inconsistent passenger demand, inadequate infrastructure, and route unviability.
• Policy & Regulatory Gaps: Poor coordination between central/state governments and stakeholders; delays from regulatory bottlenecks and land acquisition issues.