Shivamogga airport, a regional airport in Karnataka about 300 kms from Bengaluru, is facing a test of whether its scheduled air services can survive without government subsidies.

Star Air, the airport's only remaining airline, is approaching the end of its three-year viability gap funding (VGF) support under the Centre's regional connectivity scheme, UDAN. The subsidy is due to expire on November 20, 2026. The airline has not formally confirmed to the airport whether it will continue operating.

The uncertainty follows IndiGo and SpiceJet's withdrawal from Shivamogga on May 1 and June 9, respectively, this year, leaving Star Air as the sole operator.

IndiGo cited pilot shortages and operational constraints, while SpiceJet cited rising fuel costs and DGCA-related compliance issues, suggesting that passenger growth alone was not enough to offset operational pressures.

Shivamogga Airport opened in 2023 after major development work was completed in 2022.

Its current predicament highlights a larger challenge for India's regional aviation network. Building airport infrastructure and launching subsidised routes is one thing; ensuring airlines continue operating after government support ends is another.

According to an airport official The Core spoke to, the earlier withdrawals were linked to airline-side constraints, including aircraft and pilot availability, higher aviation turbine fuel costs and geopolitical disruptions affecting supply chains.

The Karnataka government has proposed 13 routes from Shivamogga under the next phase of UDAN, with financial support from both the Centre and the state. The airport operator expects the subsidy period to increase from three to five years.

The allocation of routes is expected around January 2027. But there is no confirmation yet of new operators or when services could begin.

If Star Air decides against continuing without VGF and fresh routes are not allocated quickly, Shivamogga could lose its scheduled commercial connectivity altogether.

When Subsidy Ends, The Airline Leaves

Bathinda in Punjab has already reached that point.

The last scheduled commercial flight from Bathinda airport departed on October 6, 2026. Alliance Air's Delhi-Bathinda-Delhi service, which operated five days a week, ended after the airline completed its three-year contract under UDAN.

An airport manager at Bathinda, on condition of anonymity, told The Core that the airline had fulfilled its contractual obligation under the scheme.

“Once the contract is completed, the airline has two options. If it finds the route profitable, it can continue operating without the subsidy. Otherwise, it can move to another region where it can get government support,” he said.

The airport had already lost its Bathinda-Hindon connection, operated by FlyBig, in September 2025. Alliance Air's withdrawal has left it without a regular scheduled passenger service.

“It's not that the airport is shut down. It's just the shutdown of scheduled operations,” he added.

It continues to handle charter flights, air ambulances and other non-scheduled operations. Maintenance, security and other operational requirements also continue.

The manager said that new airlines entering the Indian market could potentially consider smaller airports in the coming year. However, there is no confirmed commitment from any prospective operator to start services from Bathinda.

This doesn’t help passengers or the airport. The airport remains operational, but anyone looking to fly out of Bathinda has to make alternative arrangements.

The airport grew significantly between FY2023-24 and FY2025-26. But the latest half-year data shows a 22.6% decline in passenger traffic compared with the corresponding period a year earlier.

The September 2026 data is particularly interesting: 7,093 passengers, down 53.5% from September 2025.

This is a much more striking decline.

Between FY2021-22 and FY2025-26:

- Passenger traffic fell from 86,370 to 13,966.

- Aircraft movements fell from 2,149 to 453.

- Passenger traffic declined by approximately 84%.

Bathinda's passenger numbers rose sharply between FY2022-23 and FY2024-25, before falling by more than half in FY2025-26.

The last scheduled commercial flight, according to your interview, was Alliance Air's Delhi–Bathinda–Delhi service on October 6, 2026. The airport manager said the airline had completed its UDAN contract.

Full Flights, But Only One Destination

Kalaburagi airport, another regional airport under the UDAN scheme in Karnataka, faces a different challenge.

Unlike Bathinda, it still has a scheduled passenger service. But despite relatively strong passenger occupancy, the airport has struggled to attract additional airlines and destinations.

“Airlines in general, I feel, don't want to have small aircraft operations. Unless there is some subsidy or some other reason, they don't operate. For aircraft smaller than an Airbus A320, they have to maintain a different crew, training requirements and support systems. That increases the complexity of operations. Lower capacity always creates problems,” Vijai Agrawal, former chairman at the Airport Authority of India (AAI), told The Core.

Star Air currently operates a Bengaluru service using a 76-seat aircraft. The average load factor is between 85% and 90%, according to an airport employee who spoke on condition of anonymity.

“If Kalaburagi is recording a 70% load factor, I think the state government should come out with a subsidy for that particular route. Along with connectivity, the city also benefits from economic development and tax revenue. Finally, airlines are private businesses. They will not operate unless the numbers make sense,” he added.

The airport began operations in November 2020 with Star Air and Alliance Air. Alliance Air discontinued its services in 2023, leaving Star Air as the sole operator.

Kalaburagi previously had connections to Bengaluru, Tirupati and Hindon under UDAN. Today, only the Bengaluru service remains.

The airport has approached Fly91 and Air India Express but has not received any confirmed proposals, the employee said. There has also been speculation about IndiGo, but no formal proposal has reached the airport.

The airport currently receives support from the Karnataka government and is looking to expand its network under the next phase of UDAN.

“We conducted a local survey and identified demand for additional destinations, including Mumbai, Goa and Tirupati. We are also seeking to reconnect with Hindon,” the employee said.

It expects three to five additional routes and a longer subsidy period of five years, compared with the earlier three-year arrangement, the employee added.

The high load factor on the Bengaluru route raises an important question: if aircraft are largely full, why has that demand not translated into more flights?

Passenger occupancy is only one part of the equation. Airlines also have to consider frequency, aircraft deployment, operating costs and the commercial viability of connecting smaller cities to larger aviation networks.

Under UDAN, airlines receive viability gap funding (VGF) to bridge the difference between the cost of operating a route and the revenue they are expected to earn. The scheme also offers concessions from the Centre, states and airport operators.

A December 2024 Lok Sabha document provides route-wise VGF figures under UDAN 5.0.

UDAN Was Built To Connect The Unconnected

UDAN was meant to address the gap between the cost of operating a route and the revenue an airline can reasonably expect to earn.

Launched in October 2016, the Centre's Ude Desh ka Aam Nagrik scheme sought to make air travel affordable and bring smaller cities into India's aviation network.

The idea was to get airlines to serve routes that were commercially unattractive on their own, while giving passengers in underserved regions access to air connectivity.

Under the scheme, airlines are selected to operate routes through a bidding process and receive Viability Gap Funding (VGF) to help cover the gap between the cost of operating a flight and the revenue it is expected to earn. In return, airlines have to cap fares on a portion of seats.

The February 2026 parliamentary response disclosed cumulative VGF disbursement of Rs 4,494.16 crore up to FY2025-26 (provisional).

The Centre and state governments share the VGF, while airport operators and governments provide concessions such as waivers on landing and parking charges, and support for airport services.

The model was intended to give new routes time to build demand. But the support was time-bound: under the original scheme, airlines generally received VGF for three years on a route. Once that period ended, they were expected to continue operating commercially, without the subsidy.

That is where the sustainability question has emerged for airports such as Bathinda and Shivamogga, where scheduled services have been withdrawn or are at risk as airline support runs out.

The government has since sought to extend the programme through Modified UDAN, approved in March 2026. It provides for a longer five-year VGF period for airlines, with support tapered from the third year, alongside funding for airport development and operational and maintenance support.

The revised scheme reflects a recognition that building airport infrastructure is only one part of the challenge; keeping routes and facilities viable over the long term is another.

A Regional Network Losing Its Routes

The challenges at Shivamogga, Bathinda and Kalaburagi are part of a wider pattern of regional routes becoming inactive.

A February 2026 parliamentary reply by the Ministry of Civil Aviation identified 15 airports under UDAN as non-operational. The list included Pathankot, Pakyong, Kushinagar, Aligarh, Azamgarh, Chitrakoot, Shravasti, Bhavnagar, Ambikapur, Datia, Shimla, Cooch Behar, Moradabad, Ludhiana and Kalaburagi.

The reasons varied, including completion of the three-year VGF period, low passenger demand, aircraft shortages, leasing issues, operational restrictions and airline withdrawals.

The past two years have seen several smaller airports lose scheduled services. Moradabad, inaugurated in 2024, lost commercial operations that year. Azamgarh's flights stopped in November 2024, while Chitrakoot and Shravasti also saw services discontinued. Bathinda has now joined the list of airports without scheduled passenger flights.

The scale of the challenge is also visible in the route data. A July 2026 report, citing government figures, said commercial flights were operating on only 336 of the 669 routes launched under UDAN since 2017.

In other words, a substantial share of the routes launched under the programme were no longer operational.

When scheduled flights stop, airports do not simply shut down or stop incurring costs. They still need to maintain runways, terminal buildings, security systems, firefighting facilities, electricity, equipment and essential staff to remain operational and ready for aircraft movements. In some cases, costs may even become harder to recover because passenger-related revenues, including landing charges and terminal fees, decline or disappear.

The responsibility for meeting these expenses remains with the airport operator or the government, depending on who owns and manages the facility. This means that even without regular commercial flights, taxpayers or airport operators may continue to bear the cost of maintaining infrastructure that sees limited use.

But how does an airport manage maintenance costs when scheduled flights stop? “Bathinda luckily is a civil enclave, and the civil enclave does not cost much. You simply close the gate, and it does not cost you much. There is a civil terminal, and thereafter you can retain just some watch-and-guard staff,” Agrawal said.

“In the case of Shivamogga and Kalaburagi, these are operational airports owned by state governments, and a good amount has been invested in them. The state governments are maintaining these airports, so they should come forward with a support scheme for some time and gradually withdraw the subsidy,” he added.

Can Five Years Make The Difference?

The government is attempting to address some of these concerns through Modified UDAN, approved by the Union Cabinet in March 2026. The scheme will run for ten years, from 2026-27 to 2035-36, with an outlay of Rs 28,840 crore. It aims to develop 100 new airports and 200 modern helipads while improving regional connectivity.

“I personally feel that initially, three years was too short a period. In the first one or two years, people may not even know that there is a flight. Only when the service operates continuously do tourists and other passengers start planning to use it. Dissemination of information and stabilisation take time,” Agrawal said.

The longer VGF period expected under the new framework could give airlines more time to build passenger demand. But subsidies alone may not solve the problems of aircraft availability, fuel costs, operating restrictions and limited route economics.

“Airlines also need time to develop their logistics, vendors and support systems. Five years may be the right period, but thereafter the government should gradually phase out the subsidy rather than stop it abruptly. For instance, if the government is giving X amount today, it could reduce it to 75% after five years and then to 50%. By that time, the route may have taken off,” he added.

Shivamogga is now approaching the point at which the airline has to decide whether its route can survive without government support. Bathinda has already experienced the consequences of that decision. Kalaburagi, meanwhile, shows that even a relatively well-utilised route does not automatically translate into a wider network.

India has spent years expanding regional airport infrastructure and subsidising routes to bring smaller cities into the aviation network. The next challenge is ensuring that those connections remain after the subsidies run out.