Aviation360 MEA

FLY91 has commenced operations with two ATR aircraft and intends to add 30 more aircraft over the next five years.

A new airline, FLY91, will launch a flight route between Bengaluru and Goa this month, tapping into the growing trend of Indians traveling to short-haul destinations previously accessed by road or rail.

These routes, serviced by smaller aircraft like ATR, Bombardier Q400s, and Embraer, have been underserved by major carriers such as IndiGo and the Air India group, despite increasing demand. IndiGo operates around 45 ATRs, while the Air India group does not have any regional aircraft in its fleet. SpiceJet offers regional flights with about 34 Bombardier aircraft, leaving the regional segment to smaller carriers.

FLY91 has initiated operations with two ATR aircraft and plans to acquire 30 more aircraft over the next five years. Currently, this segment accounts for only 3% of total seat capacity, with regional aircraft making up less than 10% of the total domestic fleet.

The entry of regional airlines with viable business models could bolster this segment, according to industry experts.

Regional air transport in India has historically been neglected, with no dedicated player since Vayudoot in the 1980s or possibly Indian Airlines until 1995, noted Mark D Martin of Martin Consulting.

With major airlines in India facing challenges, regional connectivity was not on their growth agenda. The introduction of carriers like FLY91 could help foster growth in this segment.

The central government introduced a new category of airlines — scheduled commuter airlines — with a low capitalisation threshold in its 2016 policy. Additionally, airlines operating regional routes under the Udey Desh Ka Aam Nagrik (UDAN) scheme can receive viability gap funding.

As of now, only about 54% of routes operate under the UDAN scheme. Code-sharing arrangements between regional and major carriers have not materialized on domestic routes.

FLY91 and Star Air have been commended for their sustainable revenue models, which are not reliant on the UDAN scheme, according to Martin.

There is significant potential for regional aviation in India, driven by the expanding middle class, said Manoj Chako, managing director and CEO of FLY91.

The success of regional airlines depends on robust capitalization and efficient management of assets, remarked Kapil Kaul, CEO and director of CAPA India.

Chako emphasized the importance of a strong capital structure and asset management in aviation. FLY91 has raised $25 million from private equity investors and plans to establish multiple bases with a fleet of 35 aircraft over five years.