South India beckons regional airline spurt

With big cities already having developed airports, air travel is poised for a steady growth

As India selects metros to plan the next big international airport, new regional airlines from South India (relying on airports in small towns) are encouraging more people to fly, bringing more destinations under the canvas of air travel, and fostering better connectivity.

South India has already given birth to three full-fledged regional airlines, in the recent past, which are banking on the region’s financial and infrastructural development for growth. The South has a population of over 250 million, and it is believed that over 20 million of them  are capable of becoming air passengers.

Bengaluru-based Air Pegasus got its air operator’s permit (AOP) over 100 days ago, beginning flights to Hubballi and Thiruvananthapuram from Bengaluru.

“We are a true regional airline, wanting to stick to South India. There are around 40 airports in the South, but less that 20 per cent of those are connected,” Air Pegasus Managing Director Shyson Thomas tells Deccan Herald. Air Pegasus invested around Rs 100 crore to begin operations, and flies the familiar French turboprop ATR-72 aircraft.

South India has three metros at the moment, which have full-fledged international airports. Besides, many tier-I and tier-II cities also have functional airports with several international flights departing from them, which makes the South ideal to develop regional airlines opening more places to air travel.

Vijayawada-based Air Costa commenced scheduled services on October 14, 2013, planning to become a major player in the regional market. The airline flies the Brazilian Embraer E-Jet aircraft to nine destinations, some beyond the South.

“Presently, we are the only established regional carrier from South India with close to two years of operational experience. We may want to call it a trend as new players want to play safe by testing the regional markets before expanding pan-India,” Air Costa Chairman Ramesh Lingamaneni claims.

Similarly, Turbo Megha Managing Director V Umesh feels that the financial affordability among people in South India is a key factor for regional aviation to take off from here in a big way.

“There is considerable affordability in small towns, especially among the middle-class, which helps airlines plan operations there,” Umesh said. His company has begun operating a regional airline under the brand name TruJet, to operate flights to Rajhmundry, Bengaluru and Chennai from its base Hyderabad, having seen an initial investment of $20 million.

Infra to grow sector

“Airports are an essential infrastructure payer, having a key role in economic development. Periodical repairs and maintenance of airport facilities is required. There are some key factors that need to be addressed. For instance, air connectivity from tier-II and tier-III cities needs to be improved to facilitate access and communication to develop trade and industry. There will be a lot of physical and social infrastructure development in tier-II cities in future, which in turn leads to industrial development in those regions specifically. Finally, it leads to facilitate the Indian aviation’s growth,” Lingamaneni says.

Another challenge is about regions themselves. Airlines focus on regions that offer developed airports. If the latter are not focused on catering to the region’s connectivity, then it does not complement the airlines’ business.

Meanwhile, some regional airlines claim to be free from competition, especially from larger airlines, rendering them a first-mover advantage. Air Pegasus says that with the smaller size of its aircraft, coupled with its short-haul (not more than 60 minutes) routes, and a no-frills approach, the cost of operation is one-third compared with that of its ‘larger competitors’.

Regional airlines see huge traction

“In India, most domestic airlines have large aircraft of around 180 seats that must be filled up. Even if we are able to get a busload of passengers into our 68-seater aircraft, we have made 100 per cent business,” Thomas claims.

Regional airlines are also seeing immense traction among small and medium businesses, tourists and the migratory workforce. 

Says Air Costa CEO K N Babu, “Developments in tier-II cities would bring about a major shift in the way people make their travel choices. In many railway junctions, we are inching closer to full capacity and adding an additional train will get increasingly difficult. With proper stimulus from the government, air travel will be affordable and the preferred choice for travel.”

“With the right policies and focus on quality, cost and passenger interest, India would be well-placed to become one of the largest aviation markets by 2030,” Lingamaneni adds.