politics · 2025-03-25
India Revamps UDAN With ₹28,840 Cr Push
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Government approves revamped UDAN scheme worth ₹28,840 crore to boost regional air connectivity across IndiaAirline subsidy burden shifts from carriers to the exchequer, easing financial pressure on operators serving smaller routesNew scheme includes support for airport operations, aiming to make underserved airports commercially viable
Why shift airline subsidies to the exchequer?
Airlines on regional routes often struggled with thin margins, making subsidies a burden they could not sustain. Shifting costs to the exchequer removes a disincentive. [Routes like Shimla or Hubli flights] that airlines avoided become more attractive when the government absorbs the viability gap funding directly.
How does the exchequer absorb route costs?
The government funds a viability gap, covering the difference between operating cost and expected revenue on thin routes. [Routes to places like Pasighat in Arunachal] get direct treasury support, so airlines no longer front the cost and wait for reimbursement.
Why did airlines struggle under old UDAN?
Carriers faced high operating costs at underdeveloped airports with poor infrastructure. [Airlines like Air Odisha and TruJet] exited UDAN routes citing losses. Low passenger loads on remote routes made it hard to break even even with partial subsidies.
What makes this subsidy model different?
Earlier, airlines co-funded subsidies and cross-subsidized from profitable routes. Now the exchequer bears the full burden. [Unlike the old model where carriers like SpiceJet shared costs], airlines can focus purely on operations without bearing financial risk of demand uncertainty.
What does revamped UDAN mean for flyers?
Passengers on underserved routes could see more frequency and better connectivity. [Tier-2 cities like Agartala or Jharsuguda] may get reliable service. Lower financial risk for airlines means carriers are more willing to launch and sustain flights, potentially reducing fares through competition over time.
Will fares drop on regional routes?
Fare caps existed under UDAN, but irregular service limited real impact. With more carriers willing to fly, competition could push fares lower. [A Dehradun to Delhi fare] could stabilize below ₹2,500 if multiple airlines compete on the route consistently.
Which cities gain most from revamped UDAN?
Tier-2 and Tier-3 cities with existing but underutilized airports benefit most. [Cities like Mysuru, Jharsuguda, and Kannur] could see daily service. The operational support component also helps airports that lack basic infrastructure to handle commercial flights.
How does this affect airport job creation?
Airport operations support means ground handling, maintenance, and security jobs at smaller airports. [An airport like Hubli] upgrading to handle more flights could create 200 to 500 direct jobs. Multiplier effects in hospitality and transport add to local employment.
How many UDAN routes actually took off so far?
The original UDAN, launched in 2017, awarded over 400 routes but many became inactive. [Only about 3 out of 10 awarded routes] maintained regular service in some phases. Airlines cited poor infrastructure and low demand. The revamped scheme's ₹28,840 crore aims to fix these structural gaps.
How many airports are currently underserved?
India has over 130 airports, but roughly [only 70 out of 130 handle regular commercial flights]. The rest are underutilized or dormant. UDAN's revamp targets these gaps, aiming to activate airports that received infrastructure investment but never attracted consistent airline service.
What share of India flies from Tier-2 cities?
Tier-2 and Tier-3 cities account for less than 20% of total domestic air traffic. [Cities like Raipur and Trichy] have growing demand but limited frequency. Expanding UDAN could shift this ratio meaningfully if airlines commit to sustained operations.
How does India compare globally on routes?
India ranks behind the US, China, and Brazil in regional connectivity per capita. [Brazil's regional aviation program] subsidized over 200 routes successfully. India's revamped UDAN, with ₹28,840 crore, is among the largest such investments globally for a developing economy.
Source: thehindu.com