Govt announces modified UDAN Scheme in Budget 2025 to boost air connectivity

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To further improve regional air connectivity, the Indian government unveiled a modified UDAN (Ude Desh Ka Aam Nagrik) Scheme in the Union Budget 2025. Smaller cities and rural areas now have better access to air travel thanks to the UDAN plan, which was introduced in 2016.

The changes in UDAN 2025 are intended to improve economic development in Tier 2 and Tier 3 cities, lower airfare costs, and increase airport infrastructure.

It is anticipated that these developments would lead to a boom in demand for real estate in rising cities.

Let's examine the updated UDAN scheme, how it affects connectivity, and how it affects the expansion of real estate in India's Tier 2 and Tier 3 cities.

The UDAN Scheme: What is it?

In accordance with the National Civil Aviation Policy (NCAP), the Ministry of Civil Aviation introduced the UDAN Scheme (Ude Desh Ka Aam Nagrik) in 2016 as a regional connectivity scheme (RCS).

The goal is to build underdeveloped and unserved airports in order to make air travel accessible and inexpensive for the average person.

Important Aspects of the UDAN Scheme:

1. Promotes the use of underserved and unserved routes by airlines.

2. Offers airlines financial incentives and subsidies to maintain reasonable ticket pricing.

3. Improves smaller cities' airport infrastructure.

4. Shortens commutes between cities, which promotes economic expansion.

Since its establishment, UDAN has linked 70 airports and more than 450 flights, enhancing local economies, tourism, and commercial prospects for smaller communities.

What's New with the Modified UDAN Scheme 2025?

To increase air connectivity in remote places and boost the effectiveness of the current network, the government announced changes to the UDAN initiative in the Union Budget 2025.

Important UDAN 2025 Changes:

1. Extension of New Routes: To link Tier 2 and Tier 3 cities with metro hubs, more routes will be created.

A particular emphasis on coastal areas, Jammu & Kashmir, Ladakh, and Northeast India.

2. Infrastructure Development: Smaller airstrips can benefit from investments in airport renovation.

For increased safety, runways and ATC (air traffic control) systems should be upgraded.

3. Enhanced Airline Involvement: - New incentives to operate on UDAN routes for private airlines.

In order to make operations sustainable, the subsidy structure was revised.

4. Reduced Passenger Airfares: The government will set a price cap on some routes.

Senior persons and students are eligible for special fare savings.

5. Increased freight and Tourism: UDAN airports are becoming regional freight centers.

Enhancing aviation connection to promote religious and heritage tourism.

The UDAN Scheme's phases

Since its inception in 2016, the UDAN Scheme has been implemented in several stages. Airports, new routes, and improved policies were added in each phase.

• UDAN 1.0 (2017): 27 routes will be served by 5 airlines, Prioritize enhancing short-distance connectivity.

• With UDAN 2.0 (2018), 78 new routes and 73 additional airports were added.

          Connectivity is emphasized in isolated, hilly, and island areas.

• UDAN 3.0 (2019): The UDAN scheme's cargo operations are introduced.

            More routes for helicopters in rural places.

• The expansion to Northeast India, Jammu & Kashmir, and Ladakh is part of UDAN 4.0 (2020).

            Concentrate on seaplane connectivity and water aerodromes.

• The most recent changes made to UDAN 5.0 (2023–2025) were included in the 2025 Budget.

           reduced ticket costs, more infrastructure, and better airline participation.

Advantages of the UDAN Program

In India, the UDAN Scheme has revolutionized regional connectivity and brought about a number of social and economic advantages.

1. Reasonably priced air travel

By capping ticket rates at ₹2,500 for a one-hour journey, middle-class passengers may now afford to travel by air.

2. Support for Local Economies

Business activity in Tier 2 and Tier 3 cities has increased due to improved air connectivity.

The tourism, education, and healthcare sectors have experienced significant expansion.

3. Development of Infrastructure

Modern airports in smaller cities have improved the traveler experience.

4. More Job Possibilities

jobs generated in the transportation, hospitality, and aviation industries in emerging nations.

5. Real Estate Growth

Demand for real estate has surged in the vicinity of recently constructed airports.

Future industrial corridors and smart cities are attracting the attention of investors.

UDAN Scheme's Effect on Indian Real Estate

Because of the UDAN scheme's better connectivity, the real estate market in Tier 2 and Tier 3 cities is expanding quickly. Among the major effects are:

1. Growing Real Estate Costs in Developing Cities

There is currently more demand for residential and commercial real estate in cities like Coimbatore, Jaipur, Indore, Bhubaneswar, and Lucknow.

2. Commercial Hub Expansion

In order to facilitate industrial expansion, warehousing and logistics centers are expanding close to regional airports.

3. Encouragement of Real Estate for Tourism

Investments in vacation homes and hotel chains are being stimulated by improved air connectivity.

4. A Higher Need for Professional Housing

Startups, IT firms, and corporates are moving to smaller cities in search of better connectivity.