The government has allocated ₹2,400 crore to the Civil Aviation Ministry, which includes Rs ₹540 crore earmarked specifically for the UDAN scheme. Launched in 2016, the UDAN scheme has been instrumental in making air travel accessible to a large population. Over the past eight years, 1.5 crore passengers have taken flight and 619 routes have been operationalised with 88 airports, under the UDAN scheme.Pieter Elbers, CEO of India’s largest carrier IndiGo, highlighted the importance of the budget for the future of India’s aviation sector, saying, “The Union Budget 2025 has outlined various great initiatives to further develop a future-ready travel ecosystem, with emphasis on people and infrastructure, and aviation as a key enabler. Investment in developing world-class airports, enhancing regional connectivity, capacity upgrades, procedures, regulatory framework and streamlined visa facilities, will all play critical roles in bringing this vision of developing India into a global aviation hub to life.”He added, “By strengthening both domestic and international connectivity, we are fueling economic progress, bridging communities, and reinforcing aviation’s role as a catalyst for national growth and collectively building India as a leading global economic powerhouse.”
Also read: Govt allocates ₹2,400 crore to Civil Aviation Ministry in Budget 2025-26Another key announcement in the budget was the focus on developing greenfield airports in Bihar, which are expected to meet the future demands of the state’s growing aviation sector. This initiative is in addition to the ongoing efforts to expand the capacity of Patna’s existing airport and the development of a brownfield airport in Bihta.Meanwhile Aloke Singh, Managing Director of Air India Express said, “The operationalisation of 120 new airports under the modified UDAN scheme is a catalyst for unlocking the true potential of underserved regions. This aligns seamlessly with our vision at Air India Express as we continue to enhance connectivity and bridge the gap between Tier-2 cities and emerging destinations.Besides, the focus on developing 50 tourist destinations and promoting medical tourism will not only stimulate fresh demand but also spur investment, create new travel corridors, and strengthen the aviation ecosystem.Vinay Dube, Founder and CEO of Akasa Air, praised the government’s efforts, stating, “The Union Budget 2025 marks a significant step in supporting the sustained growth of India’s aviation sector. We commend the government’s commitment to infrastructure which will make air travel more accessible, thereby boosting tourism and the economy on the whole. Aligned with the vision of Viksit Bharat 2047, this focus on aviation strengthens India’s position as a global hub, ensuring greater mobility for all and contributing to a more connected, inclusive nation.”Also read: Nirmala Sitharaman says 50 tourism sites to be developed in partnership with statesUnder the UDAN scheme, airfare for an air distance of 500 km (approximately one hour of journey) on a fixed wing aircraft or for a 30-minute journey on a helicopter has been capped at ₹2,500, indexed primarily, to inflation, with proportionate pricing for routes of different lengths and flight duration. This is only applicable on 50% of the flight capacity under the regional connectivity scheme (RCS) seats that is subsidised by govt through Viability Gap Funding (VGF), while the remaining seats (Non-RCS seats) are sold by airlines at market-determined prices giving airlines opportunity to airlines to experiment with airfares and develop a market for their services.Ajay Singh, Chairman and Managing Director of SpiceJet, lauded the budget’s focus on regional connectivity, commenting, “This is a forward-looking, middle class-friendly budget that promises to boost spending, stimulate development, and set the stage for India’s growth in the coming years. With the launch of a modified UDAN scheme that will introduce 120 new destinations and bring 4 crore additional passengers into the fold over the next decade, the aviation landscape in India is set for a transformative shift. This initiative will not only make air travel more accessible to remote regions but will also drive economic growth and tourism, further empowering local economies.”Also read: What India Inc. thinks about UDAN expansion, MSME push, tax reliefsAshish Chhawchharia, Partner and Aviation Industry Leader, Grant Thornton Bharat said, “The government’s emphasis on regional connectivity through the revamped UDAN scheme highlights its commitment to the growth of the aviation sector. With 120 new destinations added to the existing 619, the scheme is set to boost tourism and trade.Singh emphasised the success of UDAN under the Modi government and reiterated SpiceJet’s commitment to its growth, adding, “UDAN has proven to be one of the most successful schemes under the Modi government, and as the first private airline to participate, SpiceJet remains fully committed to actively supporting its continued growth.”States are also contributing to the scheme by reducing VAT on Aviation Turbine Fuel (ATF) at RCS Airports located within the state to 1% or less for a period of 10 years. Moreover, States also provide free land for RCS airports along with free security and fire services.Airport operators incentivise airlines by exempting them from landing and parking charges on RCS flights. There is also no levy of any Terminal Navigation Landing Charges (TNLC) on RCS flights.Regional players like Star Air and FLY91 are already operational under the UDAN scheme, and several more are expected to enter the market this year. As more airlines participate, the growing competition could lead to reduced airfares, making air travel more affordable for passengers across India.Star Air welcomed the government’s announcement of extending and modifying the scheme for another 10 years. A spokesperson from the airline shared, “We welcome the government’s announcement of the modified UDAN scheme, which will introduce 120 new destinations across the country. This initiative aligns perfectly with our vision of enhancing regional connectivity by linking tier-3 and tier-2 cities directly to urban hubs, making air travel more accessible than ever.”
