In June 2014, the NDA Government which was just one month old then approved applications by six airlines, three of them regional. Of these, the first one to take-off was Hyderabadbased Turbo Megha. Subsequently, Air Pegasus became the second regional airline to get off the block, after Vijayawada-based Air Costa that had commenced operations in late 2013. In all, three regional airlines are in operation and all these are from South India, connecting largely the Southern towns and also some upcountry destinations.

The government had approved applications by six airlines – Air One Aviation Pvt Ltd, Zexus Air and Premier Air— which wanted to become national airlines and Turbo Megha, Air Carnival and Zav Airways under the regional airlines category. Premier Air and Air Carnival are again South India-based companies intending to plunge into airline business. These applications were pending for a long time and now even after the Ministry’s nod some of them are yet to take-off. Considering India’s geographical area and economics of flying short haul, there is enormous opportunity for regional airlines to move in with a proper route network plan and come good.

Focus on Regional Network

From the time, Ashok Gajapathy Raju has taken charge as the Minister of Civil Aviation, he has been insisting on developing regional connectivity and recently when SP’s Aviation interacted with him during the Paris International Airshow, he reiterated the government’s resolve of focusing on regional aviation. A slew of incentives including tax reliefs have been offered to regional airlines, but it remains to be seen how many are going to take up the challenge. And South India has taken the lead. A number of Tier-II and Tier-III cities have started getting frequent air connectivity. These are Hubli, Belgavi, Mysore and Mangalore in Karnataka; Vijayawada, Rajahmundry, Tirupati, Kadapa and Visakhapatnam in Andhra Pradesh; Salem, Coimbatore, Madurai and Tiruchirappalli in Tamil Nadu. Besides, Air Costa also connects to some cities in North India.

Presently, India has 14 scheduled operators including one cargo operator and three regional operators, all the three from South India. Vijayawada-based Air Costa has been on the rise. In a little over a year since it launched operations, it declared profits at a time when most airlines, barring of course low-cost carrier IndiGo, were floundering.

South One Up on North

What are the reasons that the South is doing better than the North. One of the reasons is that the two enterprises Air Pegasus and Turbo Megha which now flies under the brand name Trujet, are airline companies as offshoots of aviation business, both having been in ground handling and other allied aviation activities. However, Air Costa promoters are from infrastructure and real estate background. The other reason, according to Umesh of Turbo Megha, is that there are a number of underserved and unserved markets in India. These markets have potential and are points which can be connected easily to one of the city hubs be it Chennai, Bengaluru or Hyderabad, international airports which are flourishing with significant growth in both domestic and international traffic.

Aviation Friendly Policies

Another factor which has boosted regional aviation is the friendly policies of the state governments in South India. Andhra Pradesh has tax incentives on aviation turbine fuel (ATF) for regional airlines. The state government has stated that it will provide incentives to airlines to enhance intra- and inter-state air connectivity These are underwriting specific number of airline seats or certain percentage of the capacity of the aircraft as assessed by the government, providing an airline seat subsidy for airlines operating to specified airports in the state on specified routes based on traffic levels through competitive bidding and lower VAT on ATF at airports in the state. Presently, VAT on ATF in the state is one per cent.

Air Costa and Turbo Megha are benefiting from these friendly policies. Air Costa, belonging to the Vijayawada group LEPL Projects, got its air operator’s permit on September 18, 2013, valid for five years. Air Costa has gone in for Brazilian aircraft,the Embraer jets. It has four in its fleet, two ERJ-170-100LR (67 seater) and two ERJ-190-100 STD (112 seater). At the 2014 Singapore Air Show it ordered 50 E-Jets, the deliveries of which are to begin in 2017.

Air Costa Flies Millionth Passenger

In June 2015, Air Costa hit a milestone when it flew its millionth passenger from Bengaluru to Hyderabad. Celebrating this milestone, the airline offered a flat discount of Rs. 1,000 on economy and economy plus class tickets over the fiveday celebratory period. The airline currently operates 32 daily flights and connects nine cities – Chennai, Bengaluru, Hyderabad, Jaipur, Ahmedabad, Tirupati, Coimbatore, Visakhapatnam and Vijayawada.

Another factor which has boosted regional aviation is the friendly policies of the state governments in South India

Air Pegasus Links Three States

Unlike Air Costa which is operating Embraer Jets, the other new regional entrant Air Pegasus has deployed ATR turboprop aircraft. Bengaluru-based Air Pegasus has been promoted by Decor Aviation founded by Shyson Thomas. Decor Aviation is one of the largest ground-handling service providers in South India, having presence at all major airports including in key cities such as Bengaluru, Chennai, Cochin and Thiruvananthapuram. Air Pegasus got its air operator’s permit on March 24, 2015 with validity of one year. The airline has two ATR 72 aircraft with seating capacity of 66. It is connecting destinations such as Hubli, Kadapa, Madurai, Mangalore, Thiruvananthapuram from Bengaluru and Chennai.

Air Pegasus has an advantage due to the Government of India policy which has done away with communication, route navigation, flight landing and parking charges for this category of aircraft. Airports can earn only user development fee and passenger service fee from ATR operations and this certainly is expected to boost smaller flights.

Trujet Eyeing Unserved Markets

The latest entrant is Turbo Megha Airways from Hyderabad under the brand name Trujet. The airline is backed by Turbo Aviation, an established ground-services company in Hyderabad. It is promoted by Vankayalapati Umesh and Telugu actor Ram Charan Tej. The regional airline received its operator’s licence on July 7, 2015, with validity for one year. It has one ATR 72 aircraft with seating capacity of 72. It is planning to acquire more aircraft and is connecting Hyderabad to Tirupati, Rajahmundry, Chennai and Aurangabad as of now.

Trujet Managing Director Umesh is pinning hopes on the ‘underserved and/or unserved’ markets in India. In the last ten years of aviation growth, airlines, he avers, have just scratched the surface, considering the country’s geography and economic momentum from not just the mega cities but also from smaller towns.

The airline has identified 18 cities including Vijayawada, Tirupati, Rajahmundry, Visakhapatnam, Coimbatore, Salem, Kadapa, Mangalore, Hubli and Belgaum in the initial phase of its operations. The company plans to deploy ATR and also Embraer ERJ-145 aircraft (50 seater) to capture the nascent market.

FlyEasy, Waiting in the Wings

Another regional airline based out of Bengaluru – FlyEasy promoted by ABC Aviation and Training, has made an application with the Directorate General of Civil Aviation (DGCA) for air operator’s permit and is expected to get it end of year or early 2016. FlyEasy has started hiring pilots for the demonstration phase which takes into account the flight safety parameters that carriers have to follow. Unconfirmed reports are that the airline has plans of going national. The Chief Executive Officer, Finn Thaulow, a Norwegian, has stated that the airline will focus initially on routes that are new or presently underserved with Embraer E-190 aircraft. It plans to connect Varanasi, Ranchi, Indore and Bhubaneswar.

Yet another airline, Air Carnival has applied for the permit. Air Carnival is planning to have its operating base in Coimbatore with plans of providing point-to-point connectivity in South India. The airline plans to operate ATR 72-500.

Hoping for a Ripple Efect

There is a lot of activity in the aviation sector in the South and it is hoped that it will have a ripple effect. Up North, Zav airways has got the green signal from the Ministry to operate services in the East and North-eastern regions. Zav Airways plans to start scheduled air services from its base in Kolkata to Eastern and North-eastern cities such as Aizawl, Bhubaneswar, Ranchi and Patna with L-410 turbojet, a twin-engine short-range aircraft, manufactured by Czech aircraft manufacturer LET. There have been media reports of Religare and KRC Aviation wanting to float regional airlines in North India.

There is room for more, except that they should get their revenue models right. Presently, less than three per cent of India’s population have the capacity to fly, compared to figures in developed countries. The government has to create the right ecosystem to get the aviation sector in general and the regional aviation in particular going.The Minister of Civil Aviation appears to be “on the right track”... or should we say “on the runway”!