The Centre on Friday capped fares for half the seats on one-hour flights at Rs 2,500 as part of its new "Ude Desh Ka Aam Naagrik" or UDAN scheme. The fares on the remaining seats will be "market-based", which means the prices will be determined by demand and supply, reported PTI.

The scheme also seeks to provide air services between unserved and under-served areas and has invited proposals from operators to start flying to such airports. According to Livemint, airlines have six weeks to submit their proposals, after which they will be screened for two weeks. This will be followed by another few weeks of counter-bidding before the contract is finally awarded. There are 394 unserved and 16 under-served airports across the country.

The government expects that the first flight under this scheme will take off in January 2016. Civil Aviation Minister Ashok Gajapathi Raju told PTI, "We are cautiously optimistic about it [UDAN]." The scheme is part of the government's ambitious plan to boost regional connectivity. The Centre hopes that it will lead to the sale of Rs 30 crore air tickets a year in the domestic sector by 2022 and 50 crore by 2027.

However, airlines had expressed their displeasure at sharing the burden of funding the scheme after the government decided to impose a levy on scheduled flights on major routes. This, they said, is likely to push up regular fares for passengers. Minister Raju said the rules related to the levy, which he describes as "very small" will be “printed in the gazette in two days” while the executive order will be ready by October-end.