For the first time in Himachal Pradesh's history, the state government is putting public money directly on the line to keep planes flying to its two most important hill destinations — even when seats go empty. The Chief Minister's Office of Himachal Pradesh announced on Sunday, 25 October 2026 that the government is committing ₹35 crore in Viability Gap Funding (VGF) to sustain air services to Shimla and Dharamshala, explicitly to ensure flights continue operating even during periods of low passenger demand.

Why Shimla and Dharamshala Have Always Been a Hard Sell for Airlines

Shimla's Jubbarhatti Airport and Dharamshala's Gaggal Airport sit in terrain that makes aviation commercially punishing. Passenger loads swing wildly with the seasons — packed during summer and festival peaks, thin in the off-season — and the narrow mountain approaches limit the aircraft types that can operate there. The result: airlines consistently struggle to turn a profit, and routes get dropped when load factors fall.

This is precisely the vulnerability that VGF is designed to bridge. Under the mechanism, the government absorbs the financial shortfall between what an airline actually earns on a route and the minimum revenue it needs to keep flying. The logic is straightforward: the economic value of connectivity — for tourism, trade, and residents — far exceeds what the ticket revenue alone can justify.

VGF's National Blueprint and HP's State-Level Bet

The framework has national precedent. India's UDAN (Ude Desh ka Aam Nagrik) scheme, launched in 2016, pioneered the use of VGF to open regional air routes that the market would never naturally serve. Himachal Pradesh's move follows that logic but represents a state-government-funded commitment rather than a central subsidy — a signal that Shimla is willing to back connectivity with its own budget when central support falls short or is unavailable.

For a state whose economy is deeply tethered to tourism, the calculus is clear. Inconsistent flights mean tourists choose easier destinations. Reliable air links to Dharamshala — already a global draw as the seat of the Tibetan government-in-exile and a Himalayan trekking hub — and to the state capital Shimla can translate directly into hotel bookings, local business revenue, and tax receipts that dwarf the ₹35 crore outlay.

What the ₹35 Crore Commitment Must Now Deliver

The announcement sets an expectation. The test is not whether flights depart — it is whether the subsidy structure is designed tightly enough to attract credible airline partners, sustain year-round schedules, and eventually build passenger habits that reduce the state's dependence on the subsidy itself. Seasonal spikes in load factors will need to cross-subsidise the lean months; otherwise ₹35 crore becomes a recurring floor rather than a launchpad.

The operational details — which airlines, which routes, what schedule frequency — are the next chapter. Himachal Pradesh has placed its bet. The mountain passes the ball to the airlines.