Two airline start-ups plan to launch in summer 2015

New Delhi: Premier Airways Ltd, promoted by a non-resident Indian (NRI), and Air One Aviation Pvt. Ltd, founded by a former Air Sahara president, are expected to take to the skies by summer next year, joining over half-a-dozen Indian airlines.

The launch of the two new national airlines, following that of another, Vistara, promoted by Tata group and Singapore Airlines Ltd, expected in a few weeks, and the expansion of fledgling Air Asia India Pvt. Ltd could fuel another aviation boom in the country. It will lead to more flights, lower prices, demand for trained crew and ground staff, even an increase in finance and leasing activities.

India's new civil aviation minister, Ashok Gajapathi Raju, gave six new airlines permission to fly in July, overturning an unwritten policy of his predecessors to limit such licences. Some of the airlines had been seeking licences since 2005 and had seen three aviation ministers-Praful Patel, Vayalar Ravi and Ajit Singh-come and go.

The airlines given permission were Air One, Premier Air, and Zexus Air (all to operate nationally) and regional airlines Turbo Megha, Air Carnival and Zav Airways.

"Premier Air's owners met with us recently. They are looking to start operations by next summer," said a senior official at the Directorate General of Civil Aviation, who spoke on condition of anonymity.

Premier Air is promoted by NRI engineer-turned-entrepreneur Umapathy Pinaghapani.

Pinaghapani said the airline would comment on its plans at an appropriate time.

His LinkedIn profile, updated after the ministry granted it a licence in July, says Premier Airways will be a "high quality low cost scheduled air transport operation in India" and that it will be backed by the group, that has revenue of $125 million (about Rs.750 crore)

Air One, promoted by former Air Sahara president Alok Sharma, is expected to have a paid-up capital of Rs.90-100 crore.

"We will launch by mid-2015," Sharma said, "The process is underway"

Both airlines are in the process of negotiating with aircraft manufacturers and will revert to DGCA with their operating manuals.

That done, and subject to other technical requirements, the two can take off in six months.

A person familiar with the matter, who asked not to be identified, said Air One and Premier Air have started negotiating with lessors and manufacturers and have even appointed technical staff.

"Next year will see a surge in the sector," this person, said referring to creation of jobs for ground staff, engineers, pilots and cabin crew.

India already has seven airlines-Air India, Jet Airways, IndiGo, SpiceJet, GoAir, Air Costa and AirAsia India-that ferry around 60 million domestic passengers annually.

The DGCA official said Vistara's licence will be issued soon, maybe by the middle of December.

Vijay Mallya's Kingfisher Airlines Ltd, Paramount Airways and MDLR Airlines are among those that shut shop in the last decade.

Consulting firm Capa Centre for Aviation's South Asia CEO Kapil Kaul said he is not sure about all six airlines even taking to the air, but added that even Premier and Air One's plans are contingent on their ability to close financing.

"I remain uncertain about their (the six airlines') start-up plans," Kaul said. "Air One and Premier will start by Q3 of 2015-16 subject to fund raising."

Jitender Bhargava, former executive director at Air India, said the entry of new airlines could make it difficult for existing airlines to raise money. The government needs to study demand, growth, and other issues and come up with a clear policy on the number of airlines and aircraft India needs, he added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.