Nearly one in every five civil aviation routes operationalised under the regional connectivity scheme – UDAN (Ude Desh ka Aam Nagrik) -- got discontinued even before they completed three years in operation despite funding aid provided by the government to keep them running.
Across the 36 states and union territories, 923 routes were awarded, of which 651 were operationalised. Of these, 123 routes or 19%, were shut down by airlines before competition of three years. Uttar Pradesh saw the highest dropout with 20 routes prematurely discontinued followed by Uttarakhand with 16 routes.
Key reasons for discontinuation of routes before 3 years include disruption caused by COVID-19 pandemic, aircraft shortage, supply chain issues, aircraft maintenance, airport/runway maintenance, low passenger demand on some routes, said Murlidhar Mohol, minister of state in the ministry of Civil Aviation in a reply to questions on the UDAN scheme in the Rajya Sabha.
Under UDAN rules, carriers must begin flights within four months of winning a route bid and are granted three years of exclusivity to protect them from competition during the early phase
As on date, a total of 14 airports are non-operational under the UDAN scheme due to factors such as completion of the three-year concession period, poor visibility conditions, daytime runway restrictions at VFR-only (visual flight rules) airports, leasing issues, temporary discontinuation by airlines, and low passenger load factors.
Novation of routes (an airline operator transfering its rights to another operator) is one of the primary reasons why several airports remain non-operational. Gurugram-based regional carrier flybig won rights to start flights connecting Ambikapur in Chhattisgarh. The airline had to hand over the rights to little known airline Skyhop after it stopped operations following a request by its aircraft lessor for their deregistration.
Viability gap funding (VGF), the financial support provided by the government to lower tickets on UDAN scheme routes, could see a major correction in FY26 compared to the previous year. From start of April till the end of November 2025, the VGF disbursed stood at Rs 349.51 crore, marking an average of just under Rs 44 crore per month. This is a drop of 15% and 34% compared to FY25 and FY24, respectively.
One of the objectives of the National Civil Aviation Policy 2016, an initiative of the Ministry of Civil Aviation, is to enhance regional connectivity through fiscal support and infrastructure development.
While national level carriers like IndiGo and SpiceJet participated in several bidding rounds of the UDAN scheme, the segment has a sizeable presence of Star Air, a large regional carrier, Fly91 and state-controlled Alliance Air.
RCS-UDAN connects places that have smaller airports, where runways are designed to handle smaller aircraft. Large passenger jets such as the A320 and B737 used extensively by most airlines in India, cannot land at these small airports. Therefore, smaller aircraft with seating capacity between 30-75 are ideally suited to fly to such airports. Availability of such small planes is an issue which then delays the planned expansion of the UDAN scheme.
Longer subsidy period likely
The government is also examining whether to extend the current three-year subsidy period, which officials believe may not be long enough for airlines to stabilise operations on low-traffic routes.
Remote airports also benefit from lower aviation turbine fuel (ATF) taxes and exemptions from airport fees.
A longer subsidy window could help smaller airlines build viability over time, but it would also require a bigger funding pool.
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