State Subsidy Launches Indore's First International Route; Viability Gap Funding Backs Abu
Viability Gap Funding model subsidizes Indore's new direct service to Abu Dhabi.
Madhya Pradesh’s Civil Aviation Policy 2025 moved from paper to runway on Wednesday, when Chief Minister Mohan Yadav inaugurated the state’s first subsidised international air service at Devi Ahilyabai Holkar International Airport in Indore.
The policy’s central accountability mechanism is Viability Gap Funding. Under the framework, the state government disburses Rs 15 lakh per round trip to support the Indore-Abu Dhabi route, operated by Air India Express. That subsidy has cut ticket prices roughly in half, from a previous range of Rs 24,000 to Rs 25,000 for passengers routing through Delhi or Mumbai, to Rs 12,000 to Rs 15,000 on the direct service.
The operational terms are specific. The flight runs four days a week, on Monday, Wednesday, Friday, and Sunday, and completes the journey in three hours and 15 minutes. Before the route opened, the same trip consumed seven to eight hours through connecting hubs.
Early demand figures give the government its first compliance benchmark. Approximately 100 seats were booked on the inaugural Indore-to-Abu Dhabi departure; the return service from Abu Dhabi to Indore recorded roughly 170 bookings. Yadav said he expects passenger traffic to grow as awareness of the service spreads, framing the route as a tool for strengthening India-UAE bilateral ties and opening new avenues for trade, investment, and tourism. He identified the Malwa-Nimar region as a particular beneficiary of the reduced fares and direct connectivity.
Meanwhile, the Indore-Abu Dhabi service sits within a wider aviation expansion that Yadav has overseen since taking office. Three new airports have been inaugurated across Madhya Pradesh during his tenure. Two more, in Ujjain and Shivpuri, are under construction.
The state has also launched domestic routes connecting Rewa to Delhi, Indore, and Raipur. Routes under active development include Jabalpur-Kolkata, Bhopal-Rewa, Bhopal-Patna, and Rewa-Kolkata. Helicopter services are being extended to link Indore with Ujjain and Omkareshwar.
Regulatory reach is also expanding geographically. The government is working to bring the benefits of the Regional Air Connectivity Scheme to underserved districts, specifically Shajapur, Neemuch, Chhindwara, and Mandla, areas that current commercial aviation does not adequately serve.
The Viability Gap Funding model now applied to an international route raises a question that policymakers and oversight bodies will need to answer over time: at what passenger load does the subsidy become unnecessary, and what triggers, if any, does the Civil Aviation Policy 2025 set for reviewing or withdrawing state support?
Q&A
What is the Viability Gap Funding mechanism and how much does it disburse for the Indore-Abu Dhabi route?
Viability Gap Funding is the Civil Aviation Policy 2025's central accountability mechanism under which the Madhya Pradesh state government disburses Rs 15 lakh per round trip to support the Indore-Abu Dhabi route operated by Air India Express.
How has the subsidy affected ticket prices on the Indore-Abu Dhabi route?
The subsidy has cut ticket prices roughly in half, from a previous range of Rs 24,000 to Rs 25,000 for passengers routing through Delhi or Mumbai, to Rs 12,000 to Rs 15,000 on the direct service.
What are the operational specifications of the Indore-Abu Dhabi flight service?
The flight runs four days a week on Monday, Wednesday, Friday, and Sunday, and completes the journey in three hours and 15 minutes, compared to seven to eight hours through connecting hubs.
What governance question does the article identify regarding the Viability Gap Funding model?
Policymakers and oversight bodies must determine at what passenger load the subsidy becomes unnecessary and what triggers, if any, the Civil Aviation Policy 2025 sets for reviewing or withdrawing state support.