With the likely entry of Air Pegasus and Air Kerala in domestic market, intense competition is expected, resulting, hopefully, in better service at competitive prices, much to the delight of the air passengers
There have been major developments in the domestic airline industry. The first major change covers arrival of Ajay Singh, the erstwhile co-promoter of SpiceJet, who returns back to take full control of this ailing airline, though Kalanidhi Maran still holds some minor convertible holdings that he may utilize to advantage. Ajay Singh is expected to bring about some favourable changes, including reduction of flights to some areas and increasing in some where the demand has grown considerably, such as the Vijayawada-Hyderabad sector.
In the meantime, Air Pegasus, hub-based in Bengaluru, with a fleet of 3 ATR aircraft received the Air Operators' Permit last year and are now in the process of carrying out a "proving flight", next week, as per the DGCA specifications. It may be remembered that the Director General of Civil Aviation (DGCA) needs to be satisfied that the airline has all the basic operational capabilities in terms of operation, ground handling and other related procedures.
According to the information available, Air Pegasus expects to commence its operations from Bengaluru to Thirvananthapuram and back; they will also operate from Bengaluru to Hubli and back as a start.
The second base is expected to be Chennai, from where they expect to cover Tuticorin, Rajamundhry, Hyderabad and Kochi. Shyson Thomas, MD of this airline, is reported to have said that "all formalities have been completed". Further details are expected to be announced in the press very soon.
As many as 75 international airlines have regular scheduled operations to and from India. Out of the top ten carriers, who ferry passengers, in and out of India, Jet Airways (5.50 million), Air India (4.98 m), Air India Express (3.31 m) and IndiGo 1.49 m) have played a vital role. Others are Emirates (4.83 m), Qatar Airways (1.85m) Air Arabia (1.64 m) and Oman Airways (1.22 m). If the 5/20 Rule is waived or relaxed, chances are Air Asia India and Vistara may become serious contenders to offer better service at competitive prices. There is likely to be competition once this happens. Air Kerala, which has not yet started its service, would have an inherent advantage of being able to serve the booming Keralite population working in the Gulf and this may adversely affect Air India Express.
In the meantime, Mittu Chandilya, the CEO of Air Asia India is reported to have stated that they are awaiting the DGCA final verdict on the 5/20 Rule, which has been opposed by the existing carriers that waiver would give undue advantage particularly to Air Asia India and Vistara, who have established their base in India recently, and, who neither completed 5 years of flying experience or have 20 aircraft each!
Air Asia currently flies only three planes and expects to add one more shortly. It is likely to break even when the fleet goes to six aircraft. Its plans are to get 10 more in 2015, as this will strengthen its base and also help them to plan new destinations, which include Delhi. However, they are hesitant to announce their schedule as they wait for the government decision on 5/20 Rule, because, Mittu Chandilya is reported to have said, according to the media, that once schedules are announced, it would be difficult to make changes.
With the announcement of Air Pegasus and Air Kerala entry in domestic market, intense competition is expected, resulting, hopefully, in better service at competitive prices, much to the delight of the air passengers. At this stage, it may be worthwhile for DGCA to make a detailed study of the passenger needs and actual movement to consider whether they should, temporarily, stop issuing further licences so that domestic industry moves from loss making concerns to profit oriented operations. We must remember most of the airline companies are in serious debt situations that may impact banking institutions if they are unable to service the loans taken.
(
AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
