The Indian civil aviation sector is poised for a quantum growth with growing levels of domestic and international tourism traffic. With the upward surge, the Indian Low Cost Carrier (LCC) sector is driving this change by successfully tapping 45 per cent of the Indian aviation market share. To cope with increasing demand, the supply and competition between airlines is on the rise. From 2005, about ten companies have applied for scheduled airlines licenses, in order to enter the race. Full service carriers focused more on international routes while the LCC sector focused on the metro and mini metro routes.
Indian regional aviation takes wing
With the boom in the aviation sector after 2003, several players showed an interest in launching airlines with national operations. Approvals for nine of these were pending till August 2007, when the Ministry of Civil Aviation (MoCA) announced a separate category of airlines meant to serve India, beyond its big cities.
Soon after the policy was announced, some airlines awaiting national licenses, reapplied for regional permits. These included Star Aviation, Trans India Aviation, Air Dravida and Emric Aviation, all of which are looking to start operations in South India. In this region, air traffic outpaced other regions, in 2007.
Under the new regional aviation policy, which covers both aircraft and helicopter operators, airlines are supposed to operate primarily between airports of any of the four regions (North, South, West and East/North-East). Thus, a regional airline in a particular region operates from one metro to all non-metros in that region. However, airlines which have a license to operate in the Southern region can operate flights between the three metros in that region — Chennai, Bangalore and Hyderabad.
Directorate General of Civil Aviation (DGCA), the governing body for aviation in India, introduced a separate category for the regional airlines permit. The category is governed by the following guidelines:
Minimum initial startup capital will be required according to classification of the fleet operated (weight of the aircraft being 40,000 kg, at take off).
A regional airline should operate with three aircraft in one year with five at the end of two years.
For airlines with aircraft of a take-off mass of less than 40,000 kg, the paid-up capital should be Rs 12 crore for three aircraft. Two additional planes will ensure a required total paid-up capital of Rs 20 crore.
To ensure that such airlines remain viable, they should have a paid-up capital of Rs 30 crore, along with three aircraft to begin with. Addition of each aircraft will require Rs 10 crore extra, subject to a maximum of Rs 50 crore of equity.
Regional fixed wings continue to grow
“According to recent research, the business segment constitutes up to 65 per cent of the Indian aviation sector, while the remaining 35 per cent is from leisure and VFR segments. Out of that 65 per cent of business travel segment, 78 per cent fly to metro cities, while of that 78 per cent, 87 per cent fly from metros to tier II and tier III cities,” says Koustav Dhar, President – Commercial & Special Projects, MDLR Airlines Ltd. According to Dhar, there are about 400 aircraft operating in India, of which only 68 are capable of regional operations. Currently, only 32 aircraft are operated by regional carriers. Thus, there is a huge requirement for regional airlines to increase fleet size, in order to absorb the growing demand. “The regional aviation sector has the capacity to add 300-350 aircraft, to its current fleet size,” adds Dhar.
Waiting for approval: Some regional airlines that are waiting to begin operations include Air Dravida, Trans India Aviation Pvt. Ltd, Emric Aviation Pvt. Ltd. and King Air. Regional airlines operate with hub-and-spoke networks; they connect non-metro cities in a region, to the main metro city of that area. From this point, full-service airlines carry traffic to other metros and international routes. “The existing policy framework in aviation encourages regional airlines, as it waives landing and parking charges for smaller aircraft. Regional airlines can benefit from lower parking charges, when they use non-metro airports as hubs. The US has a mature regional airline model wherein one out of every four domestic passengers flies a regional airline,” says Jerome Cheung, Manager of Asia Pacific – Markets & Airline Analysis, Bombardier Aerospace. “By introducing a separate category for regional airlines, the government has unintentionally solved a coordination problem for the third-party MRO business. There have been some moves by the industry, to set-up third party MROs that can service all aircraft (including Boeing and Airbus). It creates a natural demand for smaller aircraft, 50-100 seater ATRs, Embrears and CRJs,” says Steve Horner, Director – Marketing India, ELF. To tap the regional market Indian Airlines re-branded Alliance Air, in September last year as Air India Regional. Currently, Paramount Airways, Jagson Aviation and Star Aviation have got a green signal from MoCA, to operate as regional carriers. Air Dravida, Trans India Aviation Pvt. Ltd., Emric Aviation Pvt. Ltd. and King Air are awaiting approval. New players like Bird Group will consider regional carrier operations, by 2009.
Regional skies getting busier
Source : TravelBizMonitor.com
by Devesh Agarwal Etihad Airways, the national carrier of the United Arab Emirates, today announced …