Most infrastructure schemes work by a central ministry deciding where something should be built. The mechanism launched on 22 September inverts that: it asks the States to say where, and then makes them compete.
On 22 September 2026 at The Ashok, New Delhi, Civil Aviation Minister Kinjarapu Ram Mohan Naidu launched the Challenge Mode Portal for Aerodrome Development, released the Scheme Document for the next phase of UDAN Route Bidding, and presided over the signing of 21 Memoranda of Understanding between the Ministry, participating States and Union Territories, and the Airports Authority of India. Minister of State Murlidhar Mohol, Secretary Samir Kumar Sinha and AAI Chairman Vipin Kumar were present.
This is the implementation stage of a scheme whose policy stage we covered in July. What is new is the selection mechanism, and mechanisms are what determine whether infrastructure money reaches useful places.
The problem UDAN was built to solve
UDAN — Ude Desh ka Aam Nagrik — was launched in October 2016 under the National Civil Aviation Policy, as the Regional Connectivity Scheme. The problem it addresses is a straightforward market failure.
An airline deciding whether to fly between two small cities faces low expected demand, costs that do not fall in proportion to aircraft size, and often an airport that cannot handle the flight. At the fare a price-sensitive regional passenger will pay, the route loses money. So it is not flown. Because it is not flown, the market never develops, and the demand that might have justified the route never appears. The route is unviable partly because it does not exist.
UDAN's answer has two parts working together. Viability Gap Funding pays the airline the difference between what the route costs to operate and what capped fares bring in, for a defined share of seats on the aircraft. In exchange, the airline accepts a cap on the fare for those seats. The subsidy does not go to the airline as a grant; it buys a specific number of affordable seats on a specific route for a specified period — typically three years of exclusivity, after which the route is expected to stand on its own.
The second part is the airport. A viability payment is worthless if there is no runway, no terminal and no fire service at one end. This is why aerodrome development sits inside the same scheme rather than beside it, and it is the half that the Challenge Mode now addresses.
The record, stated with its caveats
The Minister's figures: UDAN has operationalised 687 routes and 95 aerodromes, with more than 3.66 lakh flights carrying around 1.71 crore passengers. Aviation-sector employment has grown from around 3 million in 2014 to nearly 7.7 million today, with a stated potential of 25 million by 2040. Tezu in Arunachal Pradesh and Purnea in Bihar were named as places that were hundreds of kilometres from air connectivity and are now served.
Those numbers are worth reading with two qualifications that a good answer should carry.
First, routes operationalised is not routes operating. A meaningful share of UDAN routes have been started and subsequently discontinued, for reasons ranging from persistent low demand to the withdrawal of an airline from the market entirely. The cumulative count of routes ever launched is therefore larger than the count flying on any given day.
Second, 1.71 crore passengers across nine years is a modest figure against India's total air traffic, which runs into hundreds of millions of passengers annually. UDAN's significance is not volume. It is that specific places acquired connectivity they did not have, and the value of that is distributional rather than aggregate.
Stating both sides is not a criticism of the scheme. It is what separates an assessment from a press release, and the descriptive paper rewards the difference.
What Modified UDAN commits
The Union Cabinet approved Regional Connectivity Scheme — Modified UDAN earlier in 2026, and the Prime Minister inaugurated the next phase at Jodhpur on 4 July 2026, followed by a stakeholder workshop on 16 July. The commitment is a ten-year programme covering FY 2026-27 to FY 2035-36 with a total outlay of ₹28,840 crore, funded entirely from government budgetary support.
Within that outlay:
- Aerodrome development — around 100 airports to be developed from existing unserved airstrips over eight years
- Viability Gap Funding — about ₹10,043 crore over ten years for airline operators on regional routes
- Operation and maintenance support — for three years to roughly 441 aerodromes, capped at ₹3.06 crore per annum per airport and ₹0.90 crore per annum per heliport or water aerodrome
- Helipads — 200 modern helipads in hilly, remote, island and aspirational regions, at about ₹15 crore each
The O&M component is the least discussed and the most revealing. A small airport with two flights a day does not earn enough from landing charges to pay for its own fire service, security, air traffic services and maintenance. Somebody must fund the gap or the airport closes, which is what happened to a number of airstrips built in earlier decades. Committing three years of operating support is an acknowledgement that building the asset was never the hard part — keeping it open is.
The Minister described Modified UDAN as resting on four pillars: affordability for passengers, sustainability of operations, a transparent Challenge Mode framework for projects, and the promotion of indigenous manufacturing, pointing towards an eventual Made-in-India civil aircraft. The target stated by the Minister of State is 120 new destinations and 4 crore additional passengers over ten years.
What Challenge Mode actually changes
Under the new portal, State Governments and UT Administrations nominate airstrips and helipads for development. They identify locations they believe have connectivity potential, and those nominations compete for a limited pool of funding.
The design logic has three parts worth understanding separately.
Information sits with the States. A State government knows which of its disused airstrips is near a growing industrial cluster, which has land available without litigation, and which district has demand that a central ministry's traffic model will not detect. Asking the holder of that information to nominate is a better allocation method than a central list built from aggregate data.
Nomination creates commitment. A State that has put a site forward has an interest in that project succeeding — in providing land, clearances, security and the connecting road. Central schemes routinely stall on exactly those State-level inputs. A nomination process converts the State from an obstacle into a stakeholder, which is the same principle that makes the 21 MoUs meaningful rather than ceremonial: they establish a structured framework for coordinated action between the Centre, the States and AAI.
Competition rations. There are more candidate airstrips than there is money. Some allocation rule must decide. A transparent, criteria-based competition is more defensible than discretionary selection, and it is auditable afterwards — which discretionary selection is not.
The second mechanism launched alongside it is the route bidding round, in which airlines bid for identified UDAN routes. Bidding for routes and competing for aerodromes are the same instrument applied at two ends of the same problem: the airline that will fly for the lowest subsidy wins the route, and the State with the best-justified site wins the airport.
Where this sits in the network
India's transport policy is increasingly written as a hierarchy in which each mode does what it is best at. Our explainer on access-controlled high-speed highways describes the road equivalent of the same reasoning, and the multi-lane free flow tolling piece covers what makes a corridor deliver its promised time saving.
Aviation's comparative advantage is distance over difficult terrain. A road from Tezu to a major city must cross the Eastern Himalaya; an aircraft does not. This is why the helipad component is concentrated in hilly, remote, island and aspirational regions, and why the scheme's value is highest exactly where surface transport is hardest and lowest where a good highway already exists.
Expansion also raises the question our piece on how India investigates an air incident addresses. More aerodromes, more operators and more flights into smaller fields mean more of the aviation system operating at its margins, and the regulatory and investigative apparatus has to scale with it. The policy foundations of the current phase are set out in our earlier explainer on Viksit UDAN and regional connectivity.
🔑 Revision block
- The launch: 22 September 2026, New Delhi — Challenge Mode Portal for Aerodrome Development, plus the Scheme Document for the next phase of UDAN Route Bidding
- Signed: 21 MoUs between the Ministry of Civil Aviation, States/UTs and AAI
- Minister: Kinjarapu Ram Mohan Naidu; MoS Murlidhar Mohol; Secretary Samir Kumar Sinha; AAI Chairman Vipin Kumar
- Implementing agency: Airports Authority of India
- UDAN launched: October 2016, under the National Civil Aviation Policy, as the Regional Connectivity Scheme
- Core mechanism: Viability Gap Funding against capped fares on a defined share of seats, with route exclusivity for a limited period
- Record stated: 687 routes, 95 aerodromes, more than 3.66 lakh flights, about 1.71 crore passengers
- Employment: about 3 million (2014) to nearly 7.7 million now; stated potential 25 million by 2040
- Named beneficiaries: Tezu (Arunachal Pradesh), Purnea (Bihar)
- Modified UDAN: ten years, FY 2026-27 to FY 2035-36, outlay ₹28,840 crore, fully budgetary
- Components: about 100 airports from unserved airstrips over eight years; VGF about ₹10,043 crore; O&M support for three years to about 441 aerodromes (₹3.06 crore per annum per airport, ₹0.90 crore per heliport or water aerodrome); 200 helipads at about ₹15 crore each
- Four pillars: affordability, sustainability of operations, transparent Challenge Mode, indigenous manufacturing
- Stated targets: 120 new destinations and 4 crore additional passengers over ten years
- Milestones in 2026: PM inauguration at Jodhpur 4 July; UDAN Workshop 16 July; Challenge Mode 22 September
🎯 Practice MCQs
Q1. Under the Challenge Mode launched on 22 September 2026: (a) States and UTs nominate airstrips and helipads for development (b) Airlines nominate routes they wish to discontinue (c) The Centre allocates airports by population (d) Passengers vote for new destinations
→ (a) — nominations then compete for a limited funding pool.
Q2. UDAN was launched in: (a) October 2014 (b) October 2016 (c) July 2018 (d) March 2020
→ (b) — under the National Civil Aviation Policy.
Q3. Viability Gap Funding under UDAN is paid: (a) Directly to passengers as a fare rebate (b) To airport operators for land acquisition (c) To State governments as untied grants (d) To airlines, against a cap on fares for a defined share of seats
→ (d)
Q4. The implementing agency for the UDAN scheme is: (a) Directorate General of Civil Aviation (b) Airports Authority of India (c) Aircraft Accident Investigation Bureau (d) Bureau of Civil Aviation Security
→ (b) — DGCA is the regulator, AAI the implementing agency.
Q5. The total outlay approved for Regional Connectivity Scheme — Modified UDAN is: (a) ₹10,043 crore (b) ₹15,000 crore (c) ₹28,840 crore (d) ₹50,000 crore
→ (c) — over ten years, FY 2026-27 to FY 2035-36.
Q6. Operation and maintenance support under Modified UDAN is provided for: (a) Three years (b) One year (c) Five years (d) The full ten-year scheme period
→ (a) — to roughly 441 aerodromes, within stated annual caps.
Q7. The number of modern helipads proposed under Modified UDAN in hilly, remote, island and aspirational regions is: (a) 100 (b) 150 (c) 200 (d) 441
→ (c) — at about ₹15 crore each.
Q8. The market failure UDAN addresses is best described as: (a) Airlines colluding to raise fares on regional routes (b) A shortage of pilots (c) Excess airport capacity in metropolitan cities (d) Routes remaining unviable partly because they are never flown, so demand never develops
→ (d)
Q9. Which statement about UDAN's record is most accurate? (a) Every route operationalised remains in operation (b) Routes operationalised is a cumulative figure; a share of routes have subsequently been discontinued (c) UDAN accounts for the majority of India's air passengers (d) No aerodromes have been developed under the scheme
→ (b)
Q10. Consider the following statements about the Challenge Mode design: 1. It uses information held by State governments about local connectivity potential. 2. A State that nominates a site acquires an interest in that project's success. Which is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
→ (c) — and central schemes routinely stall on precisely the State-level inputs that nomination secures.
📋 How this gets asked (PYQ pattern)
Civil aviation appears in the CDS and OTA papers more often than candidates expect, usually through UDAN, and the questions are mostly institutional and definitional.
The full-form question is the simplest available mark: UDAN is Ude Desh ka Aam Nagrik, and the scheme is formally the Regional Connectivity Scheme. Both forms are asked.
The body question separates DGCA, AAI, BCAS and AAIB. DGCA regulates and certifies; AAI owns and operates airports and provides air navigation services, and is UDAN's implementing agency; BCAS handles civil aviation security; AAIB investigates accidents. Four bodies, four distinct functions, and they are confused constantly.
The mechanism question asks what viability gap funding is. It is a subsidy that closes the gap between cost and capped revenue on a route that would otherwise not be flown. Candidates who describe it as a general airline subsidy have missed the conditionality that defines it.
The numbers question covers the outlay, the route count and the component breakdown. The ₹28,840 crore figure and the ten-year window are the ones most likely to be asked, and the 100 airports and 200 helipads are a clean pair.
For a descriptive answer or an interview, the useful frame is that UDAN is an experiment in using a subsidy to create a market rather than to sustain one. The three-year exclusivity is the test of that intention: the design assumes the route becomes self-sustaining, and whether it does is the real measure of the scheme. A candidate who can state that, and note honestly that many routes have not survived the transition, is giving an assessment rather than a summary.
Preparing for CDS or OTA? Scheme questions get easier when you learn the mechanism rather than the outlay — what the money buys, from whom, and on what condition. Build the base with our CDS/OTA general studies notes, follow the daily CDS/OTA current affairs, and prepare with our faculty in the upcoming Cavalier courses in Delhi.
✍️ Written by Aditya Tiwari — Economy & polity faculty at The Cavalier. Reviewed by the Cavalier Faculty Desk.