Mumbai: A year after the government introduced a policy to boost regional airlines that would serve smaller cities, MDLR Airlines Pvt. Ltd, the only such carrier in the country, has decided to scale down its operations, blaming regulatory restrictions.
The airline now plans to switch back to its earlier business model of leasing out planes.
“We are struggling as our operations are restricted within one metro, that is Delhi,” said Koustav M. Dhar, executive director (marketing and planning), MDLR Airlines. “We had made more money when we were operating as a non-scheduled operator connecting more than one metro.”
The ministry of civil aviation had introduced so-called scheduled operator permits for regional airlines in August 2007, to increase air services to smaller cities.
Regional airlines are required to operate in the small towns within one of the designated regions—North, South, West, East and the North-East region. But, they are not allowed to connect to more than one major city, except those licenced to fly in the southern region.
Airlines with non-scheduled licences are not allowed to publicize their flight schedules the way carriers such as Jet Airways (India) Ltd or Kingfisher Airlines Ltd can. In effect, these airlines operate more like charter flights.
MDLR connects smaller cities in the northern sector, including New Delhi, with a fleet of three BAe regional jet aircraft.
“Our margins are adversely affected as there is less passenger response for connecting a small city to a major metro. The government should allow us to connect two metros at least, through one one-stop link in a small station,” Dhar said.
“We have tried and tested all models. You cannot continue flying with less seat occupancy factor. We are considering moving to other business opportunities such as ACMI,” he added.
Under the ACMI, or aircraft, crew, maintenance and insurance, business model, MDLR will lease its planes to other entities and take on the responsibility of providing the crew and maintenance and insurance.
To cut mounting losses, MDLR Airlines had cancelled 24 weekly flights operating on the New Delhi-Dehradun and Delhi-Dharmasala routes.
In its earlier avatar, as a non-scheduled operator, MDLR Airlines was flying to destinations such as New Delhi, Chandigarh, Ranchi and Kolkata.
“It is tough operating as a scheduled regional operator as landing and parking charges are rising, especially in the new and private airports such as Delhi and Mumbai,” Dhar said.
Other carriers such as Jagson Airlines Ltd and Star Aviation Pvt. Ltd have also secured licences to operate as scheduled regional airlines, but have not yet taken off because of the current turnmoil in Indian aviation, as reported by Mint in July.
Not everyone agrees that the scheduled regional airline model is unviable.
“The viability of a particular flight is purely dependent on how efficiently one runs the services,” said Ramachandran Iyer, executive director of Chennai-based Air Dravida. “Nothing else matters.”
Air Dravida is among half-a-dozen airilnes waiting for approval to start operating as a scheduled regional carrier. MDLR’s decision could be based on the situation in the northern market, he added.
“There is no deviation in our plans. We will be starting operations shortly as a non-scheduled operator and graduate to a scheduled regional carrier when we get approval,” Iyer said.
Kochi-based Emric Aviation Pvt. Ltd, which is also waiting for a licence, said there is no change in its plan.
Air Dravida and Emric Aviation are seeking permits for the southern region, where they can fly to more than one major city.