Three new regional airlines in South India apply for licenses

Three new South India-based airlines - Chennai-based Air Dravida, Kochi-based Emric Air and Star Aviation - have applied to the government for a licence to launch regional airlines.

Air Dravida plans to start services with Bombardier Canadian Regional Jet (CRJ) aircraft, Star Aviation plans to operate turbo-prop aircraft, officials of the ministry of civil aviation announced. The government would ask the airlines to enhance their equity bases, as they do not meet the norms, a senior official said.

All three are eyeing the booming business in southern metros like Hyderabad, Bangalore and Chennai. Other promising cities are Thiruvananthapuram, Kochi, Vishakhapattnam, Bhopal and Pune.

Both Air Dravida and Star Aviation would have their base in Chennai, while Emric Air will operate from Kochi. All three carriers will have to acquire three aircraft each within a year, and five at the end of two years. Regional carriers are allowed to start operations with a single aircraft.

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. Those operating below this threshold need a paid-up capital of Rs12 crore, and have to add Rs4 crore into the paid-up capital for each additional aircraft, subject to a maximum of Rs20 crore. Aircraft with a take-off mass of less than 40,000 kg are not required to pay landing charges at airports.

Regional carriers can operate flights from airports in their designated region to all airports in any other region, except metro airports. But they are allowed to connect to the metros in the region they operate in; in this case, Chennai, Bangalore and Hyderabad.

If a regional airline wants to operate to a city that doesn't have an operational airport, the civil aviation ministry can ask the Airports Authority of India (AAI) to make one operational.

The new regional airlines will boost the sales of smaller aircraft manufacturers like Bombardier, Embraer and ATR, whose planes carry around 90 passengers and can land on smaller airfields. Aviation turbine fuel for smaller aircraft attracts a uniform sales tax of only 4 per cent throughout the country, and with all the sops, analysts expect that these airlines should meet with success.