Introduction
India is the world's third-largest aviation market, yet air connectivity remains concentrated in metro cities — leaving tier-II, tier-III towns and remote regions severely underserved. The UDAN (Ude Desh ka Aam Nagrik) scheme, launched in 2016, sought to democratise air travel but faced persistent structural failures. The Union Cabinet's Modified UDAN scheme — with a sixfold higher outlay — is a significant escalation of state commitment to regional aviation, raising fundamental questions about subsidy-driven connectivity versus market-driven sustainability.
| Financial Commitment | Amount |
|---|---|
| Subsidies for tier-II and tier-III routes | ₹10,043 crore (over 10 years) |
| Redevelopment of 100 unused airstrips | ₹12,159 crore |
| Construction of 200 helipads in remote areas | ₹3,661 crore |
| Aircraft and helicopter purchase for state carriers | Additional allocation |
| Subsidy period extended | 3 years → 5 years |
"Whether sustained government support will lead to lasting changes depends on whether route selection and integration with broader transport and economic networks improve in practice."
Background and Context
UDAN was launched in 2016 under the National Civil Aviation Policy with the vision of making flying accessible to the common citizen. It operated on a viability gap funding (VGF) model — subsidising airlines on unserved and underserved routes to make tickets affordable. Despite activating several new routes, the scheme suffered from:
- Weak passenger demand on many selected routes
- Poor supporting infrastructure at regional airports
- Airlines exiting routes after subsidy periods ended
- High per-passenger operating costs unmatched by fare revenue
- Competition from rail and road transport on short distances
The COVID-19 pandemic further devastated small regional carriers, several of which shut down entirely. Modified UDAN is the government's structural response to these accumulated failures.
Key Features — Original UDAN vs Modified UDAN
| Feature | Original UDAN | Modified UDAN |
|---|---|---|
| Financial outlay | Lower | Sixfold higher |
| Subsidy period | 3 years | 5 years |
| Subsidy funding mechanism | Airline levy on passengers | Direct government funding |
| Airstrip redevelopment | Limited | 100 unused airstrips |
| Helipad construction | Not emphasised | 200 helipads in remote areas |
| Aircraft for state carriers | Not included | Government purchase planned |
| Ongoing airport costs | Not covered | Staffing and maintenance funded |
Significance of Modified UDAN
1. Inclusive connectivity: Extending air access to remote, hilly, and island regions addresses the geographic exclusion of millions of citizens from economic and social opportunities linked to mobility.
2. Infrastructure push: Redeveloping 100 unused airstrips and building 200 helipads creates durable physical infrastructure — an investment that outlasts any single scheme cycle.
3. Last-mile connectivity: Helicopter services and state carrier aircraft purchases directly target terrain where fixed-wing operations are unviable — the Northeast, Himalayan regions, and island territories.
4. Fiscal relief for passengers: Direct government subsidy — replacing the earlier passenger levy model — makes ticket pricing more transparent and reduces the burden on travellers.
5. Employment and regional development: Active regional airports stimulate local economies through tourism, trade, and business travel — multiplier effects that justify public investment beyond pure aviation metrics.
Structural Challenges and Criticisms
Despite the enhanced outlay, Modified UDAN carries forward the foundational weaknesses of its predecessor.
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Demand problem unaddressed: Extending subsidies keeps routes alive but does not create underlying economic activity or travel demand. Many UDAN routes struggled because the catchment economy was insufficient to sustain regular flights.
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Route selection methodology: The government has not signalled a fundamental revision in how routes are identified — a critical gap given that poor route selection was a primary cause of UDAN's underperformance.
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Missing multimodal integration: The Civil Aviation Ministry's details make no mention of ground transport links or integrated scheduling with rail and road — essential for genuine last-mile connectivity rather than isolated air access.
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Structural cost problem: Regional aviation in India faces unyieldingly high per-passenger costs due to small aircraft, low load factors, and expensive maintenance — subsidies mask but do not solve this structural reality.
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Market sustainability: No route currently under UDAN has demonstrated the ability to sustain itself commercially after subsidy withdrawal — raising the question of whether Modified UDAN creates aviation markets or merely perpetuates dependency.
Way Forward
Genuine regional aviation resilience requires going beyond subsidy extension:
- Demand-side development: Route selection must be tied to economic activity mapping, tourism potential, and population density rather than political geography.
- Multimodal integration: Air connectivity must be embedded in an integrated transport plan — linking airports to rail stations, bus terminals, and road networks through coordinated scheduling.
- Private sector viability: Regulatory reforms to reduce MRO (maintenance, repair, overhaul) costs, ATF (aviation turbine fuel) taxes, and airport charges can improve the business case for small carriers without perpetual subsidy.
- Performance-linked funding: Subsidy disbursement linked to actual passenger loads and route performance would incentivise airlines to build demand rather than collect VGF passively.
Conclusion
Modified UDAN reflects the government's genuine commitment to bridging India's aviation divide — and its enhanced outlay, infrastructure focus, and extended subsidy period are steps in the right direction. However, a scheme's longevity cannot substitute for a market's viability. Unless route selection is grounded in demand analytics, regional airports are integrated into multimodal transport networks, and structural cost barriers are addressed through regulatory reform, Modified UDAN risks becoming a larger version of the same fragile architecture it seeks to replace. Aviation connectivity is a public good — but sustaining it requires building markets, not just subsidising flights.