At a time when leading domestic carriers like Jet Airways, Kingfisher Airlines and Air India are enmeshed in financial woes, liquor manufacturer Mohan Meakins-backed Indus Airways and Jaydev Mody-promoted Freedom Aviation are planning to launch scheduled air transport services in the country.
The two carriers have already applied to the civil aviation ministry, seeking operating permits to start offering scheduled commercial services.
?The aircraft acquisition committee has recommended Indus Airways for renewal of its no-objection certificate. Freedom Aviation would now apply for air operator?s permit with the directorate general of civil aviation,? a civil aviation ministry official told FE.
While Indus plans to re-enter the airline sector with pan-India operations, Freedom Aviation has decided to launch regional air services in the southern region. Indus had launched operations on the Delhi-Mumbai route in 2006 but soon shut shop due to a cash crunch.
?We are waiting for the necessary approvals from the government,? Indus Airways chief financial officer Sudeep Sehgal told FE. The airline has decided to take five short-haul jets ? two Beech190Ds and three ERJ-145s ? on lease to services.
Jaydev Mody could not be contacted for his comments but aviation ministry officials said he had interests in textiles and real estate.
The interest by the two industry groups in commercial airlines comes at a time when the domestic airline industry is struggling to become profitable following years of mounting losses. The carriers are together estimated to have lost about Rs 8,000 crore in 2008-09 and have only now started witnessing financial recovery on the back of double-digit growth in traffic.
?Getting permits and starting an airline are two different things. If a company is under-capitalised then aviation is no game for them,? Centre for Asia Pacific Aviation (CAPA) India head, Kapil Kaul said.
According to industry estimates, a firm needs a seed capital of about Rs 150 crore to launch and sustain even a regional airline with operations limited to just a few states.
Kaul, however, said that industry would see a capacity constraint in the third quarter of the fiscal necessitating capacity addition.
Existing carriers have paid a heavy price for excess capacity in the market in the last two-three years with most of the airlines now cautious while adding to their fleet.
?The market is already overcrowded. If at all the industry requires additional capacity to meet the demand it should come from the current players,? SpiceJet chief executive officer Sanjay Aggarwal said.
Domestic carriers have cut down their capacity by 20-30% in the last financial year over 2008-09 in a bid to contain losses.
?If at all we see a bright future in airline industry we would prefer investing in existing carriers rather than launch a new airline,? an airline executive said questioning the rationale behind a new airline.
In 2008-09, almost half a dozen private firms had shown interest in starting regional air services but none has so far moved ahead beyond planing on paper as high fuel prices and theeconomic slowdown dampened spirits.
The government had earlier announced a separate category of licence called regional airline by relaxing the eligibility criteria to fuel growth in the sector.