India is planning to subsidize airlines for operating flights to dormant airports, according to people familiar with the matter, in a bid to resurrect ghost projects and justify the billions of infrastructure spending it’s poured into them.
The subsidies build on an existing initiative, called UDAN, to boost regional connectivity and will now include airports that have remained idle despite substantial investments, said the people, who asked not to be identified as the discussions are private. Airlines will be offered monthly subsidy payments in return for cheaper fares to select routes — to cover the gap between regular and discounted fares. The payments will also be based on factors including number of seats sold.
India’s aviation ministry didn’t immediately respond to an emailed request for comment.
UDAN, launched in 2016, has helped add 649 new air routes and brought 93 airfields with only basic infrastructure — such as a runway — into operation. The revamped program will now seek to boost usage of several newly inaugurated airports, including those in Azamgarh and Muzaffarpur, which still have no passengers despite having proper air-side and city-side facilities.
While the existing program allowed airlines to bid for subsidies to operate select flights, the proposed overhaul includes an auction-based approach as well as a direct incentive option that doesn’t involve bidding, the people said.
Zero Passengers
Although countries across Asia and parts of Africa face similar challenges in bridging infrastructure and demand, few match India’s scale. At least a dozen of India’s 140 airports recorded zero passengers between December and March, people familiar with the matter said earlier this year.
By recalibrating UDAN — acronym for Ude Desh Ke Aam Nagrik, or “Let the Common Citizen Fly,” Prime Minister Narendra Modi aims to address the growing imbalance in India’s infrastructure rollout, where urban hubs are congested and many rural centers remain eerily quiet.
Still, the success of this strategy will hinge not just on subsidies, but on realistic assessments of local demand, improved connectivity and tighter coordination. The government is separately planning to establish a federal Transport Planning Authority to align infrastructure projects and curb inefficiencies, people familiar said earlier this year.
The ministry has prepared the plan to address the demand issue, and it will be presented to Modi’s office soon, the people said.
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