​On a wing: On the Modified UDAN scheme

In a bid to revive the regional aviation sector, the Union Cabinet has signed off on a ‘Modified UDAN’ scheme with a sixfold higher outlay. The scheme had first been launched to expand aviation to interior areas, using scheduled commuter airlines. Even then, industry analysts and experts had complained that UDAN did not make a viable business case for small regional airlines due to a lack of supporting infrastructure, low or unpredictable passenger demand, insufficient coverage of operating costs, and lack of awareness. In Modified UDAN, the subsidy period for tier-II and tier-III routes has been increased from three years to five years, an extension at least one of the small carriers had sought under UDAN before the COVID-19 pandemic hit. The exchequer will also fund the subsidies directly rather than having airlines levy an additional charge from passengers, with the government setting aside ₹10,043 crore over the next decade to this end. The government will also spend ₹12,159 crore to redevelop a hundred unused airstrips, ₹3,661 crore to build 200 helipads in remote areas, and purchase aircraft and helicopters for state carriers to boost last-mile connectivity to better match the mode of transport to actual demand and geography. The scheme will also pay for ongoing costs such as staffing and maintenance of low-traffic airports.

Regional aviation in India is structurally fragile and unlikely to become widely self-sustaining due to the unyieldingly high cost per passenger, price sensitivity, competition from rail and road transport, and operational inefficiencies. UDAN did not address them adequately and, sadly, Modified UDAN carries that failing over. The foremost one is weak underlying demand, with UDAN often picking routes with insufficient economic activity even as leisure and occasional travel could not sustain regular flights. Extending the subsidies, even if they are eased from the third year onwards, could keep routes alive for longer but will not of itself create demand. In this sense, the government’s reluctance to revisit how it identifies and nurtures routes, and how different transport modes might substitute for air travel in low-density regions, seems inexplicable. The emphasis on last-mile connectivity and better planning also appears only partially incorporated as the details the Civil Aviation Ministry shared did not mention ground transport links or integrated scheduling, among others. Whether the decision to sustain connectivity using sustained government support, rather than cultivate a market that can stand on its own, will lead to lasting changes depends on whether route selection and integration with broader transport and economic networks improve in practice.