Editorial. Up in the Air

Why It Matters

The expanded funding aims to knit smaller towns into India’s economic fabric, but without addressing cost and demand challenges, the scheme risks repeating past inefficiencies and squandering public capital.

Key Takeaways

• Government allocated $3.5 billion to Udan over ten years
• Only 663 of 925 awarded routes remain operational
• 13 of 95 newly built airports sit idle
• Udan 2.0 adds up to $361k yearly airport support
• Demand sensitivity and competition threaten route sustainability

Pulse Analysis

India’s push for regional air connectivity reflects a broader ambition to democratise travel and spur economic growth in tier‑2 and tier‑3 markets. The Udan (Ude Desh ka Aam Nagrik) programme, launched in 2016, has already more than doubled the nation’s operational airports, creating new gateways for remote towns. By allocating roughly $3.5 billion over the next decade, the government signals confidence that air travel can complement India’s extensive rail and road networks, especially in the North‑East where terrain limits ground transport. This investment aligns with global trends where emerging economies use state‑backed subsidies to jump‑start regional aviation, hoping to capture latent demand and attract tourism and business.

However, the scheme’s track record reveals structural weaknesses. Of the 925 routes granted, only 663 have survived, and a sizable share of newly built facilities—13 out of 95—remain unused, highlighting a mismatch between projected and actual passenger volumes. High operating costs for sub‑20‑seat aircraft, pilot and engineer shortages, and weather‑related challenges such as those at Pakyong airport compound the problem. Moreover, price‑sensitive travelers in smaller towns quickly revert to cheaper road or rail options once subsidies wane, eroding the commercial viability of many routes. These factors underscore the need for rigorous route economics, performance monitoring, and clear entry‑exit criteria.

Udan 2.0 attempts to correct these flaws by extending viability‑gap funding to five years and providing up to $361k annually for airport maintenance during the first three years. While these measures offer a longer runway for routes to mature, they may be insufficient without deeper reforms. Targeted incentives for operators of ultra‑small aircraft, investment in pilot training for remote locations, and dynamic pricing models could improve cost structures. A periodic parliamentary review, as recommended, would enforce accountability and enable data‑driven adjustments. If executed thoughtfully, the refreshed scheme could finally deliver sustainable regional air links that bolster local economies and reduce travel time across India’s vast geography.