India’s regional air connectivity scheme, UDAN 2.0, introduces rigorous selection criteria for airports and mandates that airlines prove fleet availability before bidding. This shift aims to improve the success rate of regional routes, which faced high cancellation rates in the previous phase due to infrastructure gaps and operator failures.
The second phase of the Regional Connectivity Scheme, known as UDAN 2.0, is set to roll out with a major focus on operational viability. The government is moving away from the more lenient bidding process of the first phase, opting instead for a challenge mode that prioritizes airports with better existing infrastructure and stronger state government commitment. Potential airports will now be scored on their proximity to industrial or tourist hubs and the readiness of facilities like runways and passenger terminals.
A key change in this phase is the requirement for active state support. Airports will only be considered if state governments offer clear financial aid and tax concessions on Aviation Turbine Fuel (ATF). This is designed to reduce the high operational costs that previously made many regional routes difficult to sustain. The government plans to shortlist 50 airports that meet these strict infrastructure and financial criteria before opening the bidding process further.
The previous version of the scheme faced significant challenges, with nearly half of the awarded routes failing to maintain regular commercial flights. Some airports developed at a high cost struggled to attract consistent airline traffic, leading to underutilized infrastructure. For instance, the Kushinagar Airport in Uttar Pradesh, which saw a development investment of ₹448 crore, has remained commercially non-operational since 2023, highlighting the financial risk when air connectivity plans do not align with market demand.
To address the issue of non-serious operators, the Ministry of Civil Aviation has introduced a mandatory fleet verification rule. Airlines must now demonstrate that they have sufficient aircraft capacity before they are allowed to bid for new routes. This move targets past incidents where carriers with limited or non-existent fleets won routes but failed to launch operations, leaving critical regional links empty. The government is also compelling major metropolitan airports, such as Delhi and Mumbai, to earmark specific landing and take-off slots for smaller regional carriers. Access to these major hubs is essential for regional airlines to create sustainable, connected networks for passengers. For investors, the success of UDAN 2.0 will depend on whether this stricter oversight results in higher route sustainability and reduced wasted capital compared to the first phase.