Within two months of coming to power in 2014, the National Democratic Alliance (NDA) under the leadership of Narendra Modi, took several decisions that were expected to accelerate the pace of development in different verticals. One of the decisions of the Civil Aviation Ministry in July of 2014 was to accord approval for starting airlines. These airlines included Air One Aviation Pvt. Ltd, Zexus Air and Premier Air (with national operations) and Turbo Megha (TruJet), Air Carnival and Zav Airways for starting regional airlines, of which only one has taken off – TruJet. These approvals were pending for a long time and when the Civil Aviation Minister P. Ashok Gajapathi Raju gave his nod for these applicants, the industry was in a jubilant mood that things would move fast. FlyEasy, the subsidiary of Bengaluru-based ABC Aviation and Training Services, had got the go ahead signal prior to 2014.

Four Regional Players

Presently, there are four regional airlines – Air India Regional; Air Costa; Air Pegasus and TruJet. The application process for air operators’ permit (AOP) has been very tardy. Premier Airlines had applied for NoC in 2011 and it is yet to apply for a formal AOP. The company is already on six extensions.

Much was written about these airlines taking off in double quick time. Some have, some did not. There is no news too on what has happened to these projects, whether they have been canned or waiting for fund infusion. Bengaluru-based FlyEasy was to take off as a regional airline last year and it went on a major recruitment drive. There is no mention of what has happened to the airline. The company website mentions “Every single day, we move closer to our launch. Keep checking this page for updates, including vacancies, hiring drives and of course the big news of launch.” The airline had said it would fly with Embraer jets, making the flight short and sweet. The story is something else. A number of these airline aspirants are lying low, some stuck by cash crunch and some by operational issues. It was reported in the media that Chennai-based Premier Airways is waiting for AOP and had not paid salaries for a few months. So is the case with FlyEasy which has delayed salaries. Cash crunch has been their downfall, so to say, and that too when the airline industry is seeing aviation turbine fuels ebb continuously, an appropriate time to get into the airline business when fuel costs account for 23 per cent of airlines.

Cash Crunch?

FlyEasy had ambitious plans of starting operations with five Embraer planes, but later downsized the number to two, to be taken on lease from Saudi Arabian national carrier Flynas. Premier’s case was to do with investors who backed out, putting the proposal in a tailspin. FlyEasy Managing Director Rajesh Ebrahim has denied in the media that the company is facing a financial problem or attrition and also said it isn’t looking to raise the foreign direct investment (FDI).

“As long as the regulator is happy that we can sustain for a longer period of airline operations it explains our financial position...there’s no point in discussing the FDI since we haven’t approached anyone. Except the sales and marketing head, none of our senior executives or staff has resigned, nor will they,” he said.

The fate of the other two applicants – Zav Airways and Air Carnival – is not known as to when they will regional commence regional operations. Zav Airways, based in Kolkata was to start operations in June 2015 and Air Carnival too in 2015, but there is absolutely no inkling of when they will? “Adequate capitalisation with a proven and qualified management team is key. Without fully funding the business plan, starting operations in this hyper competitive environment is foolish,” said Kapil Kaul, CEO, South Asia at consultant CAPA-Centre for Aviation.

TRUJET, THE COUNTRY’S FOURTH REGIONAL AIRLINE FROM HYDERABAD, IS APPLYING FOR A PAN-INDIA LICENCE TO OPERATE IN THE NORTHERN AND WESTERN REGIONS.

Meanwhile, the good news is that there are four operators (Air India Regional; Vijayawada-based Air Costa; Bengalurubased Air Pegasus and Hyderabad-based TruJet) who are doing fairly well. It is so skewed in favour of the southern states that the South has been well networked by regional connections. There is gaping hole in the North, West and East and North-East regions.

Air Costa Pan-India Plans

Realising this, Air Costa had sought to expand its operations on a pan-India basis and had got the approval of the authorities. Recently it added its third Embraer 190 aircraft (110-seater) connecting destinations Vijayawada-Bengaluru-Coimbatore-Hyderabad-Coimbatore-Bengaluru-Vijayawada. With this Air Costa has a fleet size of three E190s and one E170 aircraft. Air Costa had ordered 50 E-Jets E2 with options for another 50 and deliveries are supposed to begin in 2018. Air Costa plans to induct the fourth E190 soon.

Vivek Choudhary, Deputy CEO Air Costa, said: “I am delighted that the day has come, today we welcome this latest generation aircraft (E190) into our rapidly expanding fleet. As we keep hinting our growing plans of replacing existing two E170 (67-seater) with E190 (110-seater) to maintain same type of fleet to serve better for our expansion plans. The E190 models are a larger stretch of the E170 models fitted with a wider cabin, larger wing. It can carry up to 110 passengers in single-class high density configuration.”

He further said: “The combination of our unique network, superb product quality and large fuel-efficient aircraft in fleet, would enable us to deliver superior performance to the passengers for a long period of time, By end 2016 we will operate six E190 aircraft in total to support our pan India network operations”. Air Costa has 32 daily flights and connects nine cities namely Chennai, Bengaluru, Hyderabad, Jaipur, Ahmedabad, Tirupati, Coimbatore, Visakhapatnam and Vijayawada.

Trujet to Follow Suit

TruJet, the country’s fourth regional airline from Hyderabad, is applying for a pan-India licence to operate in the northern and western regions. The Managing Director of TruJet, V. Umesh told SP’s Aviation that the company which had a fleet of three ATR 72-500 aircraft would be getting two more on lease before July this year. Meanwhile, it has begun process for leasing of 15 ATR aircraft in the near future and the deliveries would begin next year. The funding for the same would be through internal accruals.

TruJet which is connecting seven destinations now will soon be expanding to other southern pockets first and then northern and western regions. The passenger load factor on its routes, he said, was on an average 80 per cent and this was encouraging the company to expand at a faster rate.

TruJet is the brand name of Turbo Megha Airways. The airline is a subsidiary of Turbo Aviation, an aircraft maintenance and ground handling services company based in Hyderabad. It commenced operations on July 12, 2015, with inaugural flight between Hyderabad and Tirupati.

Air One Aviation Private Ltd — an integrated aviation player which is into air charter business, aircraft maintenance service, aviation consultancy, ground handling, aviation academy and promoted by former Air Sahara President Alok Sharma — is waiting for long-term investors to start a schedule national airline. Air One had also announced ambitious plans to induct six to eight planes a year and in five years to have a fleet of 40 planes. They are yet to see daylight.

However, hopes are not dashed as the NDA Government is focused on enhancing regional connectivity like no government has. A number of concessions and incentives are on offer for players to take the bite. Once the National Civil Aviation Policy is announced, expected in April this year, the talk is that it will attract players, including some mainline airlines, to get into the regional airline market. There is so much to be tapped in terms of passenger and cargo throughput from non-metro cities and these can be served well only by regional players.