India's regional air connectivity scheme Udan will receive ₹502 crore in FY25, lower than the revised estimate of ₹850 crore for FY24 and the initial estimate of ₹1,244 crore. The amount will be spent to revive 22 airports, start 124 air routes, and finance viability gap funding for north-east connectivity.
Overall, the civil aviation ministry will get ₹2300 crore in FY25, lower than FY24's revised estimate of ₹2922.12 crore, and initial estimate of ₹3113.36 crore.
The budget set aside ₹1158.79 crore for Air India Asset Holding Ltd (AIAHL), a special purpose vehicle holding various assets owned by Air India when it was under government ownership. The amount is for servicing loan transferred to it as a result of Air India's financial restructuring. For FY24, AIAHL was initially allocated ₹1144.49 crore, which has been revised to ₹713.92 crore.
The FY24 budget had proposed to revive 50 additional airports, heliports, water aerodromes and advanced landing grounds for improving regional connectivity under Udan, short for Ude Desh ka Aam Nagrik. On Thursday, the finance minister said that an amount of ₹1,000 crore has been sanctioned for three years from April 2023 until March 2026 for revival and development of unserved and underserved airports, helipads, water aerodromes, and advanced landing grounds, among others.
The government further said that so far, 33 of these airports, heliports and other landing grounds have been identified tentatively for revival and development under the third phase of Udan. In July, ₹410 crore was sanctioned for the development of 15 aerodromes and the remaining heliports and water aerodromes will be identified from the ongoing and future rounds of bidding under the Udan framework.
"As of December 2023, 75 airports and 517 routes have been operationalized under the RCS (regional connectivity scheme). Around 75% of the targeted airports are already operationalized and the construction of the remaining airports is ongoing. Of the 517 routes that are operational, 349 routes have been operationalized three years ago and would not be eligible for RCS benefits from April 2024. The routes requiring support under RCS has come down to 32% in FY2025 as compared to 43% in FY2024. Given this, the decline in allocation to RCS is unlikely to have any material impact on the ongoing airport development under the Udan scheme," Vinay Kumar G., Vice President & Sector Head - Corporate Ratings, ICRA Ltd, said.
