Aircraft shortage forces firms to put off regional airline plans

Aircraft shortage forces firms to put off regional airline plans

The plans by several start-up firms to launch regional airline services in India have been hit by a paucity of aircraft—of the short-haul jet and turboprop variety—in the market, and are now likely to launch operations later this year or early next.

While Kolkata-based start-up airline ZAV Airways Pvt. Ltd has already missed its proposed launch in April and plans to start services by August, the country’s first licensed scheduled regional airline to be run by Star Aviation Pvt. Ltd, backed by the $4 billion (Rs17,040 crore) Dubai-based ETA Star group, has told the government it expects to start operations only next year, against 2008.

Globally, planes like the Italian-French manufacturer Avions de Transport Regional or ATR-made ATR-42 and ATR-72 along with Boeing Co.’s 737 NG and the A320 manufactured by Airbus SAS are in short supply, an executive with a leasing firm said. “These four are the most difficult to get," said Amit Mittal, general manager (India) for Veling Ltd. Lessors, typically, do not lease out planes for periods shorter than three years, a period that start-up firms are not often comfortable with.

Demand from India for ATR planes is also strong given a 41-strong fleet in Indian skies—of the more than 600 planes operated by the country’s carriers—and a strong inventory of spares and local engineering expertise.

Chennai-based Star Aviation was granted a regional licence in December to operate services in the southern part of the country and had planned its initial operations by leasing ATR aircraft. But now the airline has told the civil aviation ministry that it “proposes operation from April 2009", according to a senior government official, who preferred not to be identified.

The airline has stitched up a deal with Brazilian aircraft maker Empresa Brasileira de Aeronáutica S.A. in a deal estimated at nearly $220.5 million at list prices, or about $31.5 million per aircraft, and the “delivery of new Embraer 170LR will commence (around March 2009)", the company informed the ministry. Five of the seven planes orders will be delivered next year and two in the first half of 2010, with an option for three more deliveries in the second half.

It could not be ascertained if there were reasons other than delayed aircraft deliveries in Star Aviation’s launch. T.V. Dorairaj, a director at Star Aviation, declined comment.

In the first year of operations, according to its note to the aviation ministry, Star Aviation plans to start daily flights between Chennai, Thiruvananthapuram and Hyderabad. The second aircraft is likely to be deployed on the Chennai-Madurai-Thiruvananthapuram route, while its third jet will likely fly between Hyderabad, Bangalore and Chennai. Subsequent planes added to its fleet will extend Star Aviation’s reach to Visakhapatnam, Kochi, Coimbatore, Tirupati, Kozhikode, Tiruchirapalli and Mangalore.

Jagson Airlines Ltd and MDLR Airlines Pvt. Ltd were the other firms granted permission in recent months to operate regional aviation services connecting smaller cities in north India. The licences were awarded under a regional airlines policy introduced mid-last year. Both the airlines were already running charter operations before the policy announcement.

ZAV Airways said it is finding it difficult to lease turboprop planes and to even buy other jets, with delivery schedules packed until next year. If the airline still manages to secure ATR deliveries, it will go with that plane or else switch to Embraer-made aircraft like Star Aviation, said Kishor Zavery, chairman of ZAV, confirming talks and negotiations with the Brazilian manufacturer. “It is high time, we have to start now," he said.

With shorter landing strips in the hilly terrain of the country’s North-East, the airline wants to use turboprops instead of jets, which require greater runway length to land and take off.