The budgetary allocation for the Ministry of Civil Aviation has been cut by nearly 10 per cent to Rs 2,400.31 crore for the next financial year, with the regional air connectivity scheme UDAN set to get a lower amount of Rs 540 crore. The allocation in the Union Budget 2025-26, presented by the Finance Minister Nirmala Sitharaman in Parliament on Saturday, is less compared to Rs 2,658.68 crore in the revised 2024-25 Budget.
Out of the total allocation for the next fiscal starting from April 1, 2025, UDAN will get Rs 540 crore, which is 32 per cent lower compared to Rs 800 crore in the year-ago period. Interestingly, Sitharaman has announced that UDAN (Ude Desh ka Aam Naagrik) scheme will be modified to connect 120 new destinations.
As per the budget papers, the allocation for the DGCA and BCAS have increased marginally to Rs 330 crore and Rs 95 crore, respectively, for 2025-26. For the Customs Cost Recovery (CCR) charges to Airport Authority of India (AAI) and AAI Cargo Logistics and Allied Services Company Ltd (AAICLAS) for tier II / III cities' airports, the allocation has been raised to Rs 142.75 crore from Rs 124.17 crore in the same period a year ago.
In the next fiscal, Air India Asset Holding Ltd will get a slightly higher allocation of Rs 1,025.51 crore compared to Rs 1,017.67 crore in the current financial year. The budgetary provision is for servicing of loan transferred to AIAHL as a result of financial restructuring of Air India.
In her Budget speech, Sitharaman said UDAN has enabled 1.5 crore middle class people to meet their aspirations for speedier travel. "Inspired by that success, a modified UDAN scheme will be launched to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years. The scheme will also support helipads and smaller airports in hilly, aspirational, and North East region districts," the minister said.
According to the budget papers, UDAN allocation is for revival of airports and for commencement of RCS routes, Viability Gap Funding for North East Connectivity. "To improve connectivity in NE region, a new scheme has also been formulated for providing air connectivity and aviation infrastructure," it added. India is one of the world's fastest growing civil aviation markets.
Airlines welcomed the proposal to modify UDAN scheme to provide regional air connectivity to 120 new destinations, saying the move will make air travel more accessible as well as help boost overall economic growth. Presenting the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman said UDAN (Ude Desh ka Aam Naagrik) has enabled 1.5 crore middle-class people to meet their aspirations for speedier travel.
SpiceJet Chairman and Managing Director Ajay Singh said the budget is forward-looking and middle class-friendly and aims to boost spending and stimulate development. "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," he said in a statement.
Regional airline FLY91's MD and CEO Manoj Chacko said UDAN scheme has been a pathbreaking initiative in enhancing regional air connectivity. "Regional aviation has the potential to be a key driver of growth, connecting underserved cities and unlocking their economic potential. As a pure play regional airline focused on Tier 2 and Tier 3 destinations, we at FLY91 see this as a transformative step that will accelerate air travel accessibility and drive growth across India," he said.
