The Union government will extend financial support to airlines operating under the UDAN regional connectivity scheme from three years to five years in a phased manner, Union Minister of Civil Aviation Ram Mohan Naidu announced on Thursday, 16 July in New Delhi. The move is aimed at improving the viability of thin regional routes that have historically struggled to attract sustained airline interest.

Key Changes to the UDAN Framework

Speaking on the sidelines of a UDAN workshop, Naidu said the revamped scheme — which has already been extended for another 10 years — will also broaden the eligibility criteria for airports to qualify for viability gap funding (VGF). Under the revised norms, an airport will be classified as unserved or underserved if it receives fewer than 14 flights a week, up from the earlier threshold of 7 flights a week. 'We have now increased that threshold to 14 flights a week, which will allow more routes to receive viability gap funding,' Naidu said.

O&M Support for Tier-2 and Tier-3 Airports

The minister also announced operational and maintenance (O&M) support for airports in Tier-2 and Tier-3 cities that are unable to break even due to low passenger volumes. 'Some airports are facing losses due to lower passenger volumes. The government will extend a helping hand by providing operational and maintenance support wherever airports are unable to meet their operational expenses,' he said. This is a significant policy addition, as many smaller airports commissioned under earlier UDAN rounds have remained financially unviable despite infrastructure investment.

100 Airports, 200 Heliports in a Decade

Naidu reiterated the government's target of building 100 new airports and 200 heliports over the next decade, emphasising that close coordination with state governments would be critical. He noted that the government is currently building or upgrading airport infrastructure at the pace of roughly one new terminal or airport every month. 'We have had 100 per cent participation from all states and Union Territories in the workshop. This shows the enthusiasm for the UDAN scheme and reflects the partnership between the Centre, states and other stakeholders,' he said.

Government's Stand on Rising Airfares

On the Supreme Court seeking a detailed report from the Centre on rising airfares, Naidu said the government would present its regulatory framework in full. He defended dynamic pricing as an internationally accepted practice essential to the health of the aviation sector. 'Dynamic fare pricing is an internationally accepted practice and is essential for promoting the aviation sector and improving connectivity. That is why airlines in India are allowed to follow dynamic pricing,' he said. This comes amid growing public concern over ticket prices on domestic routes, particularly in smaller cities where UDAN routes are often the only affordable option.

What This Means for Regional Aviation

The UDAN scheme, launched in 2016, was designed to make air travel accessible to smaller Indian cities by subsidising airlines on underserved routes. The extension of VGF support from three to five years directly addresses one of the scheme's persistent criticisms — that the subsidy window was too short for airlines to build sustainable load factors on new routes. With the widened eligibility threshold and O&M support now added, the revamped framework represents the most comprehensive overhaul of UDAN since its inception. Industry observers will be watching whether the enhanced support translates into more airlines committing to regional routes long-term.