More carriers plan to return to the skies

More carriers plan to return to the skies

Mumbai: A clutch of small passenger and cargo airlines is raring to return to the skies.

The Gurgaon-based MDLR Airlines Pvt. Ltd, that suspended operations in the first week of October, contemplates restarting in January. Similarly, Jagson Airlines Ltd, that got its licence to operate as a regional airline in the early 2009 but never took off, now plans to start commercial operations on 15 February.

With the Indian aviation sector expected to fly back to better times, about half a dozen regional carriers and two dedicated cargo carriers are planning to begin operations in the first six months of 2010.

Carriers which have been waiting in the wings are taking heart from a revival in passenger traffic, even as the aggregate loss of Indian airlines rose 44% to Rs8,557.37 crore in 2008-09. The projected losses for the current fiscal are no less, but the private domestic airlines are expected to make a combined profit of $250-300 million (Rs1,170-1,404 crore) in the fiscal year ending March 2011, a 22 December report of consulting firm Centre for Asia Pacific Aviation (Capa) said. It will, however, take them longer to wipe off losses accumulated in the recent downturn.

“We have already got the permission to import one Avro RJ85 aircraft for our regional operations. The plan is to connect Srinagar, Leh, Ranchi, Patna and some other points of Himachal Pradesh from Delhi," Jagson Airlines’ chief executive officer Koustav M. Dhar told Mint on Friday.

Dhar was most recently with MDLR Airlines as its chief operating officer that was flying three Avro jets with 70 seats made by BAE Systems, Inc.

“MDLR will be ready for operations in January. Of the three aircraft, one is fully functional and the second will join the fleet soon after minor maintenance," said Harsh Vardhan, chairman of Starair Consulting Pvt. Ltd, that is advising at least five airlines including MDLR.

According to him, four airlines are expected to commercially launch operations in the next six months. Initially, they will start as non-scheduled operators that do not publish timetables. Vardhan, former chief executive of wound-up state-owned feeder airline Vayudoot, advises MDLR, Luan Airways Pvt. Ltd and three other regional airlines.

“In three months, Luan Airways lines will start flying based out of Surat," Vardhan said, adding in next six months, three more regional carriers from Uttarakhand, Orissa and the North-East will start flying.

In 2007, the civil aviation ministry introduced a policy for small start-ups to connect small towns, complementing national operators. It has given permission to several start-ups, including ZAV Airways Pvt. Ltd, Star Aviation, MDLR, Jagson Airlines and King Air Pvt. Ltd.

An executive at Flyington Freighters Pvt. Ltd, promoted by a Hyderabad-based business family whose members also own the Deccan Chronicle newspaper, said his airline would launch operations in the first half of 2010.

Apart from these players, Star Aviation Pvt. Ltd, that was to start operations?in?early 2009 from Chennai, has recently obtained an initial “no objection certificate" (NOC) from the ministry of civil aviation extending the deadline to start operations till 2 June 2010.

Dedicated freight carriers such as Aryan Cargo Express Pvt. Ltd and Quikjet Cargo Airlines Pvt. Ltd too have obtained similar extensions.

Aryan Cargo is bringing two Airbus A310 aircraft to support its cargo airline, following the footsteps of Deccan Cargo and Express Logistics Pvt. Ltd, floated by G.R. Gopinath, who started country’s first low-fare carrier Air Deccan. After launching its cargo operations with three A310 planes, Gopinath is bringing six small ATR-72 planes to boost the connectivity to small towns, using Nagpur as hub, according to the data of the ministry of civil aviation.

Re-entry of regional airlines is critical for the aviation industry as domestic carriers have been incurring huge losses because of excess capacity and high jet fuel prices. This has forced at least a dozen airlines to postpone their commercial launch.

Charles Dhanaraj, an associate professor of management at the Kelley School of Business at Indiana University, Indianapolis, and an expert on the Indian aviation industry, told Mint last week that the sector can fly back in to profitability zone as the economy develops, with an warning that “if it enters into hyper-competitive phase, it will kill the industry itself."

“These carriers are getting over-excited with economic growth. One should not forget several start-up carriers wound up in mid-1990s. When there are a lot of planes with huge capacity in their bellies, where is the market for dedicated freight carriers?" asked a director of a leading private airline, who did not want to be identified. According to him, regional carriers will harm the profitability of Jet Airways (India) Ltd and Kingfisher Airlines Ltd.

But Jagson’s Dhar does not share this pessimism. “There is tremendous potential for regional carriers as the main carriers are focused on metro routes. A regional carrier can claim at least Rs8,000 for a Delhi-Ranchi, Delhi-Kullu or Delhi-Leh ticket while a main carrier cannot dream of getting Rs3,000 for Delhi-Mumbai sector," he said.

Starair’s Vardhan endorses his view: “The loss made by domestic carriers in the last two years was because of over-capacity and they were focusing only metro routes. The small towns continue to be under-served. Also, the industry is now moving to coastal belt and companies are moving near to the raw material sourcing centres in smaller cities".

Meanwhile, among the existing players, Kingfisher Airlines will add more planes to its fleet from early next year as the airline is in the process of settling a dispute on payment default with an international engine maintenance firm. “The engines are coming back for Kingfisher Airlines planes. This would mean that at least 10 more planes would fly from early next year," a person close to the development said on condition of anonymity. A Kingfisher Airlines spokesperson declined to comment on the matter.