Regional airlines plan flies into turbulence

Mumbai: Regional airlines meant to serve the domestic market beyond India’s big cities have run into the turmoil currently roiling the aviation industry.
Some proposed regional airlines have decided to delay the launch of operations and postpone taking delivery of aircraft in the face of skyrocketing jet fuel prices and a looming slowdown in the economy.
And with the industry expecting a combined loss of $2 billion (about Rs8,620 crore) this fiscal year, the government has tightened its norms for issuing airline permits.
At least half-a-dozen companies are waiting for permits to operate as regional carriers, which would fly between large and small cities or between small cities.
Most regional airlines, including aspiring carriers, had been hoping to start by middle of this year. Only three regional airlines so far have permits to start operations— MDLR-Airlines Pvt. Ltd, Jagson Airlines Ltd and Star Aviation Pvt. Ltd.
Jet fuel prices have surged to Rs71,630.53 per kl in July in Mumbai, from Rs37,799.54 a year earlier, plunging many existing airlines deeper into the red.
“ATF (aviation turbine fuel) increases will definitely hit us as it will shoot up operation costs,” a senior executive with Jagson Airlines said.
Chennai-based Star Aviation, a unit of Dubai-based ETA Star group, is also postponing its commercial launch to March 2009 from September this year. The airline’s officials, however, said the delay is unrelated to the aviation slowdown.
Meanwhile, MDLR Airlines has started regional operations with three Avro planes, said U.K. Bose, chief operating officer.
Meanwhile, the ministry of civil aviation has kept the issuance of permits on hold as it is scrutinizing and reviewing the financial and business models of the airlines in the wake of the turmoil in the market.
“We have secured approval for non-schedule operations, which are not very different from scheduled operations except that we can’t publish the timetable for our flights,” said Ramachandran Iyer, executive director of Chennai-based airline Air Dravida..
“We have a clearcut business model to make profits even at this turbulent time,” said Muhamin Saidu, chief executive of Kochi-based Emric Aviation. “At present, we are waiting for the licence to come.”
The airline is evaluating securing a non-scheduled licence to begin with, and so it can converge into scheduled operations later.
MDLR Airlines, which was running as a non-scheduled carrier, recently moved its operations to scheduled permits.
10/07/08 P.R. Sanjai/Livemint

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Categories: Regional Airlines Jul 2008