Mumbai: After burning its fingers with a national launch, Chennai-based full-service carrier Paramount Airways Pvt. Ltd seems to have found more success with a region-by-region strategy.
After establishing itself as a major player in the southern region, the airline will on 27 April take another step towards a national presence with flights to Kolkata, Guwahati and Agartala in the eastern and north-eastern region, as well as a few to north Indian cities. In mid-2008, it had made its entry into western India with flights to Pune. The airline also has plans to fly to Mumbai, Nagpur and Bhopal.
New horizons: Paramount had claimed a 2.2% market share of the total domestic passengers carried by Indian scheduled carriers in March.
Paramount Airways is promoted by Paramount Textile Mills Pvt. Ltd and in 2006, Kotak Mahindra Bank Ltd’s private equity fund India Growth Fund had picked up a 10% stake in the airline for $15 million (Rs75 crore today).
M. Thiagarajan, managing director of Paramount Airways, said, “We will be connecting cities such as Kolkata, Guwahati and Agartala to south Indian cities. This was always the strategy—to enter region by region. Shortly, we will be connecting main north Indian cities.”
The business class-only airline, which launched in 2005 with a few national routes, soon restricted itself to building its presence in the four southern Indian states of Andhra Pradesh, Tamil Nadu, Kerala and Karnataka.
“We have already saturated south Indian cities and now we want to leverage the infrastructure in the south by offering direct connectivity to other regions. With this, we will be having point-to-point passengers and those who travel via other cities,” Thiagarajan said.
Typically, national carriers such as Jet Airways (India) Ltd and Kingfisher Airlines Ltd have a presence across the country, especially on metro routes. Paramount Airways had claimed a 2.2% market share of the total domestic passenger carried by Indian scheduled carriers in March, while Wadia Group’s GoAirlines (India) Pvt. Ltd, which runs low-fare carrier GoAir, had a 3% market share. GoAir is the closest comparable carrier to Paramount, given the number of planes each flies. Paramount has six 80-seater Embraer aircraft, with plans to acquire two more, one each in June and July.
Vijay Nara, an aviation analyst at brokerage firm Centrum Broking Pvt. Ltd, said that Paramount’s entry into eastern and northern regions will have only a marginal impact on other scheduled carriers in the short term. “Paramount Airways may pose a threat to other carriers in a year or two, if it decides to expand aggressively,” he added.
Domestic carriers are expected to report combined losses of $2 billion for fiscal 2009 due to high fuel costs and excess capacity. However, smaller planes of up to 40,000kg, such as the Embraer, are exempt from landing and parking fees and have to pay a fixed 4% sales tax on jet fuel, against 4-32% that other aircraft pay.