Indian regional airlines likely to get operating permits soon

Five new regional scheduled airlines - three in South India and two in North India - are likely to get permits to operate soon. The union civil aviation ministry's aircraft acquisition committee is reported to have held a special meeting a few days ago and recommended that these five operators get the go-ahead.

The three South-Indian operators are the Chennai-based Air Dravida promoted by Sheik Dawood, Star Aviation promoted by an NRI from Dubai, and the Bangalore-based Trans India Aviation of K Chandrashekhar. The North-Indian operators are MDLR of G K Goyal and Subhash Gulati's King Air.

The aircraft acquisition committee has officials from the civil aviation ministry, Director General of Civil Aviation (DGCA), Airports Authority of India (AAI) and the Bureau of Civil Aviation Security (BCAS).

All the three new southern regional airlines are likely to be low-cost carriers (LCCs). Air Dravida proposes to use Bombardier Canada regional jet (CRJ) aircraft, while Star Aviation is likely to use an ATR turboprop fleet.

Bombardier CRJs and ATR turboprops are small commercial aircraft with a passenger capacity of between 40 people and 90 people, or about one-third to half of the capacity of an Airbus A320 or Boeing 737.

All three southern airlines are eyeing the booming business in regional metros like Hyderabad, Bangalore and Chennai, as well as upcoming cities like Thiruvananthapuram, Kochi, Vishakhapattnam, Bhopal and Pune. Air traffic growth in the southern region has outpaced other regions in the past few years.

The minimum start-up capital for regional carriers that have three aircraft with a take-off mass of over 40,000 kg is Rs30 crore ($7.5 million). Those that operate aircraft with a take-off mass of less than 40,000 kg need a minimum paid-up capital of Rs12 crore ($3 million), and have to add Rs4 crore ($1 million) into the paid-up capital for each additional aircraft, subject to a maximum of Rs20 crore ($5 million). Aircraft with a take-off mass of less than 40,000 kg are not required to pay landing charges at airports.

The new regional airlines will boost the sales of manufacturers of small regional jets and turbo-prop planes, like Bombardier, Embraer and ATR, most of whose planes carry less than 90 passengers and can operate from smaller airfields. Aviation turbine fuel for smaller aircraft attracts a uniform sales tax of just 4 per cent throughout the country, and analysts expect that these airlines should be fairly successful.