Regional Airline Sector in India
Introduction
The Ministry of Civil Aviation (MoCA) has issued NOCs to two new airlines: Al Hind Air and FlyExpress. This increases the number of regional airlines in the pipeline to four, including Air Kerala and Shankh Air, which have NOCs but are yet to start operations.
Challenges in the Regional Airline Sector
The regional airline sector in India is challenging, with more failures than successes due to various factors:
- High price sensitivity and low-profit margins.
- High operational costs denominated in dollars and high debt levels.
- Limited demand and high seasonality of travel at smaller airports.
- Difficulty in accessing finance and debt due to perceived high-risk levels.
- Viable alternative transport modes like trains and roadways.
New Entrants and Their Plans
Details about the new airlines:
- Al Hind Air: Part of the Al Hind Group, plans to operate with ATR-72 turboprop aircraft.
- Air Kerala: Aims to be an ultra-low-cost carrier connecting tier two and three cities with major hubs, but has struggled to meet AOC requirements.
- Shankh Air: Based in Uttar Pradesh, plans to operate regional flights from Noida International Airport.
Industry Dynamics
Despite being a difficult market, the Indian aviation sector is growing due to a rising middle class. Successful regional airlines need:
- Lean and cost-effective operations.
- Focus on underserved regions with sufficient demand.
- Strong financial backing to withstand market challenges.
Conclusion
While regional airlines face numerous challenges, there is optimism for improvement as the market matures. These airlines need to strategically position themselves to succeed in the evolving aviation landscape.
