India's first scheduled regional airline will soon take to the skies with the civil aviation ministry issuing an operating licence to Chennai-based Star Aviation Pvt. Ltd, an airline start-up unit of the ETA Star group, a Dubai-headquartered conglomerate.
The entry of so-called regional airlines, which are permitted only to fly between India’s large and small cities or between small cities under government rules, is expected to halt rising fares in an industry under consolidation. Regional airline companies are not allowed to fly crowded routes between large metropolitan cities.
Star Aviation has been given permission to start a regional service in the South, according to civil aviation minister Praful Patel. This is the first scheduled airline licence issued by the ministry in more than a year.
ETA Star has business interests in engineering, construction, shipping, automobiles, manufacturing, retail, travel and energy, according to its website. Earlier this month, it ordered a mid-sized business jet from Hawker Beechcraft Corp. for operations in West Asia. The group had revenues of $4 billion (nearly Rs16,000 crore) in 2006, said the website.
A Bangalore-based spokesman for the group declined immediate comment. According to presentations that Star Aviation has made to the government, the airline will operate a fleet of five turboprop planes, made by Italian-French manufacturer Avions de Transport Regional (ATR), on lease to start with. It is likely to have an operational base in Chennai, together with aircraft maintenance facilities at Hyderabad.
With a boom in aviation, several players had shown interest in starting national airlines, nine of which had been pending approval till August when the aviation ministry announced a separate category of airlines meant to serve an India beyond its big cities.
Soon after the new policy was announced, some of the airlines—including Star Aviation—awaiting national licences reapplied for regional permits. It is unclear whether the other players, including Air Dravida, Bangalore’s Trans India Aviation Pvt. Ltd and Gurgaon-based MDLR Airlines Pvt. Ltd, will get regional permits anytime soon.
“We haven’t said no or rejected anyone,” said minister Patel, responding to a question on whether other pending players will also be issued regional licences in the next three months. “But we have to see—if something goes wrong tomorrow then everyone will blame us. So it’s better to do a thorough assessment before-hand.”
Patel said the government would wait and watch how the first regional airline takes shape. “Regional doesn’t mean money is not involved—regional (airline) will also grow bigger tomorrow. And to become bigger, we have to see what is their potential, evaluate their background,” he added.
In a July interview to Mint, the minister had said regional airlines would take to the skies in the next six months. “Regional (aviation) is the future, because there is a lot of opportunity connecting tier II and tier III cities with smaller airlines, ATF (aviation turbine fuel) is cheaper, landing and navigation charges are waived for 80-seater and smaller planes,” he had said. Tax on jet fuel for the smaller planes regional carriers will use is set at a low 4% compared with the 30-40% that national carriers such as Jet Airways and Kingfisher pay on the fuel.
Regional carriers based in South India will also have the benefit of operating from less crowded airports. The new international airports at Bangalore and Hyderbad, for instance, will be operational by March-end. Also, unlike in other regions of the country where regional carriers cannot connect two metropolitan cities, the government's regional airline policy allows such airlines to fly between the cities of Bangalore, Hyderabad and Chennai.
Paramount Airways managing director M. Thiagarajan said regional airlines could work well as feeder airlines. “There are number of routes which could support regional airlines in the South like Hubli, Belgaum, Bellary, Salem, Tirupati and Pondicherry, which are less connected. Anyone having 20-50 seater aircraft can bring passengers and feed them to the larger airlines in the metropolitan cities,” Thiagarajan said.