MDLR comes to GoAir’s rescue, sells seats on less lucrative routes

MDLR comes to GoAir’s rescue, sells seats on less lucrative routes

Mumbai / New Delhi: Wadia Group’s GoAirlines (India) Pvt. Ltd, which runs low-fare carrier GoAir, has bought seats from Gurgaon-based MDLR Airlines Pvt. Ltd, which recently started operations in the north, to meet a rule mandating airlines to connect remote areas.

MDLR Airlines came to GoAir’s rescue after the latter’s attempt to purchase seats had been spurned by most domestic carriers.

Aviation rules require domestic airlines to fly a certain percentage of flights to smaller cities and towns that are poorly connected. Not complying with the requirement could potentially lead to an airline’s operating licence being scrapped. However, airlines have the option of buying seats from other operators to provide the prescribed service.

GoAir, which is rationalizing routes because of high jet fuel costs, has met this requirement by buying seats from MDLR that flies to smaller towns, thus being able to deploy a majority of its flights on more lucrative routes such as the one between Delhi and Mumbai.

“Yes, they have bought it from some airline (to comply with regulations)," said Kanu Gohain, director general of Civil Aviation. Mint could not ascertain the price of the seats and numbers, though a senior GoAir executive confirmed the transaction.

“We have complied with all necessary regulatory conditions of buying seats proportionate to the flights deployed on the lucrative routes. We have adjusted in such a way that we bought very minimum seats from MDLR," said the executive on condition of anonymity.

Another person familiar with the development said GoAir had cancelled some flights to main cities to reduce the seat-buying obligation.

MDLR Airlines, promoted by the Gopal Goyal-controlled MDLR group that has business interests in realty development, is the only carrier currently flying under a regional licence issued by the civil aviation ministry to promote air connectivity to small cities.

As on 29 July, GoAir had cut at least 224 weekly flights in its summer schedule, according to the ministry, and as reported by Mint last week. Other airlines that are members of the lobbying group, Federation of Indian Airlines, or FIA, had decided not to help GoAir as it had deployed flights on the already crowded metro routes, the most profitable ones.

India’s so-called route disbursal rules have divided domestic routes into three categories. Category I represents the profitable routes, including major cities such as Mumbai, Delhi, Bangalore, Hyderabad, Kolkata and Chennai. Category II includes the north-eastern region, Jammu and Kashmir and Lakshadweep, while category III represents places such as Coimbatore, Kochi and Pune.

Airlines have to deploy in category II regions at least 10% of their capacity deployed on the most profitable routes, and at least 50% in the category III routes.

“One cannot see this instance as an incident that happened to GoAir. This will be the case with others also as carriers cannot continue flying to remote areas with 20% seat occupancy. It is high time to review route disbursal guidelines," said a senior executive with Kingfisher Airlines Ltd, who declined to be named.

Though FIA has already asked the government to relax the guidelines, a senior civil aviation official said there was no question of a change as the guidelines are meant to connect remote regions such as the North-East.

“Airlines need not worry," this official said, “the more you run on good routes, the more you have to run the North-East. Now that they (airlines) have reduced the metro routes, their total commitment to the North-East has gone down anyway".