A Costly Revival of a Fragile Idea
The Union government’s approval of a revamped UDAN (Ude Desh ka Aam Nagrik) scheme, backed by a sharply increased financial outlay, reflects a familiar policy instinct: when a scheme underperforms, expand it. Packaged as a solution to India’s regional connectivity gap, UDAN 2.0 attempts to revive a model that has, thus far, struggled to demonstrate long-term viability. The question is not whether connectivity is desirable; it undoubtedly is, but whether the current approach is economically defensible.
Revisiting an Incomplete Success Story
The original UDAN scheme was often celebrated for operationalising airports and launching new routes across underserved regions. Yet, beneath these achievements lay a pattern of fragility and led to the UDAN scheme failure. Airlines frequently withdrew once subsidies tapered, routes saw inconsistent passenger loads, and several airports remained underutilised. What was projected as a transformative intervention increasingly resembled a subsidy-dependent network with limited staying power.
UDAN 2.0 does little to fundamentally alter this trajectory. Instead, it extends the same logic more subsidies, longer support periods, and expanded infrastructure without adequately addressing the underlying causes of failure.
Subsidies Without Demand: A Structural Mismatch
At the heart of the problem is weak and uneven demand. Regional aviation in India does not operate in a vacuum; it competes with an extensive and cost-effective rail and road network. In many Tier 2 and Tier 3 air connectivity, passenger traffic remains too thin to sustain regular flights. Economic activity is limited, disposable incomes are constrained, and travel patterns are irregular.
Extending subsidies from three to five years may delay airline exits, but it does not resolve the fundamental mismatch between supply and demand. Public funds, in this context, risk being used to artificially sustain routes that lack intrinsic viability. The danger is clear: a policy designed to enable connectivity may end up perpetuating inefficiency.
Infrastructure Expansion Without Utilisation
The government’s plan to revive unused airstrips, build helipads, and expand aviation infrastructure appears ambitious, but ambition alone does not guarantee outcomes. The experience of UDAN’s earlier phases suggests that infrastructure creation often outpaces its utilisation. Airports without adequate traffic, facilities without operational depth, and routes without passengers point to a deeper issue of planning disconnect.
Without rigorous demand assessment and region-specific strategies, UDAN 2.0 risks repeating this pattern, creating assets that are politically visible but economically underproductive.
The Economics Airlines Cannot Ignore
For airlines, regional routes remain commercially unattractive. High fuel costs, low passenger density, and operational inefficiencies create a challenging environment. While subsidies offer temporary relief, they cannot compensate for structurally weak routes indefinitely.
Moreover, reliance on government support distorts market incentives. Airlines may participate in the scheme to access subsidies rather than to build sustainable operations. This not only undermines efficiency but also raises questions about the optimal use of public resources.
Ignoring the Competition Factor
One of the most overlooked aspects of regional aviation policy is competition from alternative modes of transport. India’s railways and highways have significantly improved in recent years, offering affordable air travel in India. For short to medium distances, the time advantage of air travel is often marginal when factoring in airport procedures and connectivity.
UDAN 2.0 does not sufficiently address this competitive reality. Without a clear value proposition, whether in terms of speed, cost, or convenience, regional flights will continue to struggle to attract consistent passenger traffic.
Connectivity vs Development: A Reversed Logic
A key assumption underlying UDAN is that connectivity will drive economic development. While improved access can certainly contribute to growth, it cannot substitute for it. In regions where economic fundamentals are weak, connectivity alone is unlikely to generate sustained demand.
The policy, therefore, appears to reverse the natural order: instead of building connectivity where economic activity exists, it attempts to create activity through connectivity. This approach may work in select cases, but as a broad strategy, it is fraught with uncertainty.
The Risk of Perpetual Dependence
Perhaps the most significant concern is the risk of long-term dependency on subsidies. If routes continue to rely on financial support beyond the extended five-year period, it would signal a deeper structural failure. At that point, the policy choice becomes stark: either continue funding unviable routes or accept their discontinuation.
Neither option is particularly appealing. The former strains public finances, while the latter undermines the credibility of the scheme. UDAN 2.0, in its current form, does little to resolve this dilemma.
A Policy in Need of Rethinking, Not Expansion
The limitations of regional aviation in India are not merely operational they are structural. Addressing them requires a more nuanced approach than simply increasing subsidies and expanding infrastructure. Demand generation through regional economic development, better integration with other transport modes, and more targeted route selection are essential.
Instead of scaling up an imperfect model, the government would do well to revisit its foundational assumptions. A smaller, more focused scheme with clearly defined viability criteria may prove more effective than a broad, subsidy-heavy expansion.
Epilogue: Grounded Realities vs Lofty Ambitions
UDAN 2.0 reflects an ambitious vision of connecting India’s hinterland by air. However, ambition must be tempered by economic realism. Connectivity that cannot sustain itself risks becoming a recurring fiscal burden rather than a catalyst for growth.
The promise of “last mile connectivity by air” is compelling, but it cannot be achieved through subsidies alone. Unless the scheme confronts the structural constraints of demand, cost, and competition, UDAN 2.0 may struggle to rise above the limitations of its predecessor. In aviation, as in policy, a longer runway does not guarantee a successful takeoff.
