The Promise of UDAN
Launched in 2016, the Ude Desh ka Aam Nagrik (UDAN) scheme was designed to make air travel accessible to the masses. The plan had two main goals: connect small and medium-sized cities by operationalising unserved and underserved airports, and make flying
affordable. It worked through a system of Viability Gap Funding (VGF), where the government subsidised airlines to operate on routes that were not immediately profitable. In return, airlines had to cap fares on a certain number of seats, with the iconic promise of a one-hour flight for around ₹2,500. The initiative saw the revival of old airstrips and the development of new airports, aiming to boost local economies and bring the country closer together.
A Troubling Reality
Despite its grand vision, the UDAN scheme is facing significant turbulence. Recent data reveals a stark reality: of the 669 routes made operational since 2017, commercial flights are currently running on only 336. This means nearly 50% of the routes that were started have been discontinued. The government has invested heavily, spending around ₹4,700 crore on subsidies for airlines and another ₹4,800 crore on airport infrastructure, yet the high rate of discontinuation highlights a deep-rooted problem. This isn't a new issue; a 2023 report from the Comptroller and Auditor General (CAG) noted that of the routes that completed their three-year subsidy period, only a small fraction could sustain operations on their own.
Why Are Airlines Pulling Out?
The core of the problem lies in commercial viability. For many regional routes, the passenger demand is simply too low to cover the high operational costs once the initial three-year subsidy period ends. Airports in Karnataka's Bidar and Kalaburagi, for instance, lost their daily flights once the VGF support was exhausted. Airlines also face significant operational hurdles. These include delays in making airports ready for service due to regulatory bottlenecks, a scarcity of the smaller aircraft needed for these routes, and a lack of access to crucial landing and departure slots at major metro airports like Delhi and Mumbai. Without consistent connectivity to these large hubs, smaller carriers struggle to build a sustainable network that attracts enough passengers to stay afloat.
The Challenge of Long-Term Sustainability
The high rate of failure raises a fundamental question: is the scheme's original design sustainable? The initial assumption was that three years of financial support would be enough for a route to mature and become self-sufficient. However, experience shows this is often not the case, with some analyses indicating that as few as 7-10% of routes remain viable after the VGF ends. Beyond subsidies, airlines are grappling with a tough economic environment, including high fuel costs and competition from improving road and rail networks, which can be far cheaper for short-haul journeys. Many of the smaller regional airlines that were key to the UDAN network have either shut down or significantly curtailed their operations, further weakening the system.
A Revamped Scheme and an Uncertain Future
In response to these challenges, the government has launched a modified scheme, sometimes called Viksit UDAN. This new phase comes with a significantly larger financial outlay of nearly ₹29,000 crore and extends the subsidy period for airlines from three to five years. The renewed focus is on strengthening airport infrastructure and providing a longer runway for airlines to achieve profitability. While this signals a commitment to the goal of regional connectivity, the core challenge remains. Unless the fundamental economics of these routes change—either through a surge in passenger demand or a significant reduction in operational costs—the risk is that many will once again be grounded when the extended subsidy period tapers off.
