Parliamentary panel wants Udan air connectivity scheme viability studied before disbursing ₹28,840 crore
NEW DELHI: A parliamentary panel has recommended that the government assess profitability before disbursing ₹28,840 crore over 10 years on Udan, the regional air connectivity scheme.
Udan, an acronym for Ude Desh ka Aam Naagrik, was launched in October 2016 and meant to make flying affordable for the masses, connecting smaller cities and towns with the national air network. Government subsidies are provided to airlines operating on these otherwise unviable routes, on flight tickets and to build infrastructure.
New Delhi has spent ₹9,000 crore from 2016 to January 2026 on Udan. The amount proposed to be set aside for the Modified Udan has been tripled to deepen regional connectivity and expand inclusive air access across the country.
“The Committee recommends that the Ministry commission a comprehensive independent impact assessment… covering cost per passenger on each route, route-wise viability metrics, the proportion of routes achieving self-sustainability… The Modified Udan scheme design should incorporate lessons from this assessment,” the panel said.
The report was tabled in parliament on 25 March, the day the Cabinet approved the Modified Udan Scheme. The panel is headed by Sanjay Kumar Jha, Janata Dal member of the Rajya Sabha from Bihar, and was constituted on 26 September 2025.
The Development Monitoring and Evaluation Office of Niti Aayog had called for proposals in 2023 to do a mid-term appraisal of the initiative. Details are yet to be made public.
The new scheme, which is yet to be formally launched, will provision subsidy for air tickets for five years. An amount of ₹10,043 crore has been proposed to support airline operators for 10 years. It will also develop 100 airports from existing unserved airstrips and other infrastructure such as helipads, airstrip renewals and water aerodromes.
Route reviews
The 31-member committee said the impact on each Udan route “should be periodically reviewed.” It sought data on passenger demographics and said subsidies for routes should be rationalized based on their performance.
“Routes with less than threshold performance could be restructured, as continued support without review could reduce the efficiency of the scheme,” the panel said.
In the ongoing Udan scheme, one of every four routes is not operational. Udan has 657 connections now. The panel cited the fifth phase where 160 of the 282 routes offered had no takers after six rounds of bidding. Over half of the routes in this phase are not operational.
“Aggressive subsidization is not a substitute for demand creation. So, a performance review of existing routes, and why so many failed to generate or do not have demand needs to be seen. It makes sense to link subsidisation to outcomes,” said Rajendra Prasad, an aviation expert and former director (airworthiness) at the Directorate General of Civil Aviation (DGCA), the civil aviation regulator.
The absence of a structured exit strategy for unviable city connections meant that “many Udan airports struggle with sustainability,” the panel said.
Aggressive airport infrastructure additions have also faltered. Of the 93 regional airports, 15 are “temporarily non-operational” and have no planes taking off or landing, as per submissions by the civil aviation ministry in parliament. The capex on these non-operational airports is close to ₹900 crore, or 10% of the scheme’s disbursals.
“Udan airports face challenges with capacity utilization,” the panel said.
“You either create the infrastructure first and then wait for demand to pick up or you start building infra only when there is demand. And this is why you end up having an airport somewhere but no flights,” said GS Bawa, secretary general of the Air Travellers Association.
The civil aviation ministry is yet to respond to queries from Mint.
Few regional airlines
“Udan did create some appetite for air travel even in smaller cities, though there aren’t enough dedicated regional carriers,” Bawa added.
Larger airlines continue to dominate India’s aviation industry.
Data from DGCA show that when Udan started, there were 12 scheduled commercial airlines in the country, including the then state-owned Air India, privately held AirAsia India, Vistara, Jet Airways, IndiGo and SpiceJet. Regional carriers – at least five in 2017 – had less than a 1% market share.
In the ensuing years, another 10 carriers operated for certain periods of time till end-December 2025. However, at least 14 airlines folded up, including Jet Airways and GoAir and regional carriers FlyBig and TruJet.
India now has eight carriers. IndiGo, the Tata-owned Air India Group (including Air India Express and merged entities Vistara and AirAsia India), SpiceJet and Akasa Air have an over 98% market share. Some operate on regional routes.
There are four regional carriers – Star Air, Fly91, IndiaOne and state-owned Alliance Air – with less than 2% market share between them.
Passenger count is up. It increased from 117.2 million in 2017 to 167 million in 2025, as per DGCA data. As of 25 March, a total of 663 Udan routes have been operationalized across 95 airports, heliports and water aerodromes and more than 344,000 flights have been operated, carrying over 16.3 million passengers, the civil aviation ministry said.
