A comprehensive regional airline policy needs to be formulated that truly encourages entrepreneurs to float small regional airlines and take air connectivity to the remote parts of the country

A decade from now, if all goes well, India will have around 500 airports. Among them will be the refurbished airports, reclaimed airports, private airports and perhaps 40 Greenfield airports. Currently, this enormous country of 1.2 billion people has to manage with just 127 airports, barely 82 of them active. However, moves are afoot to ensure that every district will have an airport (or at least an operational airstrip). Air travellers from even the remotest reaches will need to go only a short distance to access one. Make no mistake, even if half of the planned airports actually open for commercial operations by 2020, it has the potential to dramatically transform the aviation scene. But with not a single regional airline in operation today (see Off the Beaten Track, SP’s Aviation, June 2010), would sufficient flights be forthcoming to make these airports commercially viable?

Mysore’s experience is illustrative. The Airports Authority of India (AAI) took up the development of Mysore’s old Mandakalli Airport to permit operations of ATR-72 turboprop type of aircraft in Phase I. The airport, completely refurbished at a cost of Rs. 60 crore ($12.5 million), was inaugurated on June 15. And yet, none of the seven scheduled domestic airlines appeared keen to begin services to Mysore, privately citing poor traffic prospects. Kingfisher Airlines seems agreeable but its launch date could be delayed to around October-November this year. Meanwhile, Phase II development of the airport, intended to enable aircraft of the A-321 jet class to operate, have got bogged down for reasons of (what else?) land acquisition. If charming Mysore, which is Karnataka’s second largest city, is not mouth-watering enough for the airlines, how can much smaller cities like Hassan and Shimoga ever hope to enjoy regular air services?

Far and Forgotten

Delhi’s gleaming Terminal 3 has set a new benchmark for airport infrastructure. But it has also given rise to a feeling that with so much stress being laid on more lucrative airports in the metros, airports in Tier-II and Tier-III cities are being neglected. The Indian government may be somewhat reluctant to allocate sizeable funds to remote airports because air passenger growth there cannot keep pace with the large cities. State governments have also experienced mixed success in roping in private players for many of the smaller airports. For years, it has been recognised that the Northeast region is in dire need of air connectivity. For years, the North-east Council has been trying to promote the establishment of a dedicated regional airline. But besides some inadequate non-scheduled services the efforts are yet to bear fruit.

Experts agree that there’s practically unlimited scope for air services to expand in India. At present, scheduled carriers have around 260 narrow-body aircraft of 150-200 seat capacity like the Airbus A320 and the Boeing B737. These are difficult to fill except on the main routes. Providing airconnectivity to smaller cities needs regional aircraft of capacity less than 100, of which the airlines have a combined total of perhaps 60 planes. Embraer estimates that around 250 low-to-medium-density routes remain unused. Another 133 routes have less than one flight a day since the major airlines do not consider such routes profitable. These routes can be viable only for small regional airlines with rightsized aircraft enjoying suitable concessions and incentives.

Regionally Rewarding

Just two decades ago, when regional jets began to appear with increasing frequency, especially in the US and Canada, they were mainly small aircraft with 50 seats or less. In fact, regional airlines pioneered low-cost travel long before the term ‘no-frills’ became fashionable. They served to economically convey little streams of passengers from small, remote airports to the nearest hub. At the hub, the streams would become a river ready to be channelled into large airliners belonging to the major carriers and transported over great distances to other major hubs. Regional jets are growing in size nowadays, with capacities of around 70 to 110 passengers. And the trend seems to be towards even larger aircraft of up to 150 seats, thus blurring the distinction between regional jets and narrow-body airliners. The reason is clear. With oil prices rising, though still well below the $147 (Rs. 7,000) per barrel peak of July 2008, in India, fuel forms around 40 per cent or more of an airline’s operating cost. Some analysts are of the view that oil prices will rise sharply yet again over the next couple of decades. Regional jets are at some disadvantage since their perseat fuel burn (and hence operating cost) works out higher than for the bigger narrow-body airliners.