Twenty-one signatures gave Modified UDAN a national footprint. On September 22, the Civil Aviation Ministry, Airports Authority of India and 18 states and three Union Territories signed memorandums intended to identify, develop and operationalise airports, airstrips and helipads for the next phase of India’s regional-connectivity programme.
The participating states are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Karnataka, Manipur, Meghalaya, Mizoram, Maharashtra, Nagaland, Odisha, Rajasthan, Sikkim, Tamil Nadu, Telangana and Tripura. The Union Territories are Lakshadweep, Puducherry, and Dadra and Nagar Haveli and Daman and Diu.
But the MoUs do not identify 21 airlines, allocate aircraft or promise scheduled services. They create a framework under which governments can nominate aviation assets through a Challenge Mode portal-routes must still be selected, bid, awarded, prepared and flown.
That is the central test of Modified UDAN. India knows how to inaugurate an airport. It has not yet shown that every thin regional market can support a reliable air service after the ceremony and subsidy end.
The central announcement does not publish each signed MoU or a state-by-state schedule of airstrips, money and completion dates. It says the agreements coordinate the identification, development and operationalisation of aviation assets according to local priorities.
Under the UDAN model, state support has traditionally included land free of encumbrances, road and other hinterland connections, reduced tax on aviation turbine fuel, free airport security and firefighting, concessional utilities and part of the route’s viability-gap funding. The published scheme framework has generally required a 20 percent state share of VGF, reduced to 10 percent for North-Eastern states and Union Territories.
Why flights depend on states? Land and runway readiness is state's obligation under the agreement. An awarded route cannot begin if the strip, terminal or obstacle environment is incomplete and without fire and security cover. Scheduled operations require trained personnel, equipment and continuous compliance not only an inaugural deployment. A tax reduction helps little if fuel must be tankered in or the aircraft must carry extra fuel from its previous stop. Small airports have recurring costs of electricity and navigation even when passenger and commercial revenue is minimal. A short flight loses its mobility advantage if the airport is difficult to reach and has no road access. Delayed state payments can weaken already fragile airline cash flow.
Modified UDAN attempts to address the airport-cost problem with three years of operations-and-maintenance support, capped at Rs.3.06 crore annually for each airport and Rs.0.90 crore for each heliport or water aerodrome. It also allocates Rs.12,159 crore to develop 100 airports from existing airstrips and Rs.3,661 crore for 200 helipads.
The underlying concern is that regional-only aerodromes have high recurring costs and limited revenue. New infrastructure support can keep a facility open but it cannot by itself create enough passengers for a daily service.
The first UDAN created substantial connectivity, but headline totals count every route that ever started, not necessarily routes still flying. As of February 28, 2026, the government said 925 valid routes had been awarded and 663 operationalised and 327 had subsequently been discontinued for reasons including COVID-19, aircraft shortages, maintenance and supply-chain problems, runway work and weak demand.
The strictest sustainability test comes from the Comptroller and Auditor General’s audit of the first three rounds. Of 774 routes awarded, 371 began operations. Only 112 completed the full three-year concession and just 54 remained in operation after that support period as of March 2023.
That 54-route figure should not be misapplied to the whole later programme, it covers early rounds and a specific audit window, not every route awarded since. But it exposes the difference between four claims that are often blended together such as route awarded, route started, route completed its subsidy tenure and route survived commercially.
More recent data show the same pressure. In July 2026, 336 of 669 routes that had been made operational were reportedly still active. Bidar and Kalaburagi, for example, lost Star Air services after the three-year support period ended.
There have also been revivals. Government data cited in later reporting indicated that 46 of 114 discontinued routes were restarted, including 20 without VGF. That suggests a route can fail at one moment and become viable later as demand, airline capacity or network economics change. It also argues for measuring reliability over time rather than treating closure or inauguration as a permanent verdict. But where are the aircraft? Modified UDAN aims to add 120 destinations and carry four crore additional passengers over ten years. Its own policy material identifies limited availability of small fixed-wing aircraft and helicopters as an operational constraint.
The aircraft problem has two layers. A 70-seat ATR may work between a regional city and a major hub when demand is concentrated. A 17-to-20-seat aircraft may better match a remote market but has higher per-seat costs, fewer leasing options and a smaller pool of pilots, engineers and spares. A route can therefore have too little demand for the available aircraft even when some passengers clearly need the connection.
India’s specialist public regional carrier, Alliance Air, lists 18 ATR 72-600s, two ATR 42-600s and one Dornier 228, a fleet of 21 aircraft. The government’s immediate Modified UDAN response to the small-aircraft shortage includes only two additional HAL Dorniers for Alliance Air and two Dhruv helicopters for Pawan Hans.
Other capacity exists with IndiGo’s ATR fleet, FLY91, Star Air and smaller operators, but it is not a pool sitting idle for public-policy routes. Those aircraft must also earn commercially, undergo maintenance and fit within each carrier’s crew, spares and network strategy.
The supply market is tight. Aviation analysts note that only one globally available manufacturer currently sells a new 60-to-90-seat turboprop, delivery positions are scarce and used-aircraft prices are elevated. At the smallest end, Alliance Air’s Dornier operations have been constrained by a shortage of civil pilots qualified on the type.
Modified UDAN has a Rs.28,840 crore ten-year outlay, including Rs.10,043 crore for route VGF. Airline support can run for five years rather than three, tapering from the third year, while route exclusivity remains limited to three years. As we have seen, after running three years on UDAN routes, the services are suspended because airlines stop getting support, it has happened recently with Delhi Bathinda flight.
The extension gives airlines more time to develop demand. It also risks postponing rather than solving route failure unless each award contains a plan for frequency, local demand generation, connecting traffic and post-support economics.
A regional route rarely succeeds as an isolated line between two dots. Its economics improve when the schedule connects with larger flights, residents can complete a same-day trip, hospitals and businesses use the service, tourism is marketed, and local road transport meets arrivals. A twice-weekly flight at inconvenient hours may technically keep a route operational while providing little dependable mobility.