Booming Country Wants More Rural Regional Air Service

India's first scheduled regional airline is ready for takeoff. Chennai-based Star Aviation Pvt. Ltd -- an airline unit of ETA Star group, headquartered in Dubai -- is soon to get an operating license from the civil aviation ministry, according to the Wall Street Journal.

Regional airlines are permitted to fly only between India's large and small cities or between small cities under government rules, in an effort to halt rising fares in an industry under consolidation. Routes between large urban centers are protected for larger carriers.

Star Aviation has been given permission -- the first in a year-- to start service in the South, according to civil aviation minister Praful Patel.

ETA Star is a conglomerate with interests in engineering, construction, shipping, automobiles, manufacturing, retail, travel and energy, according to its website.

Earlier this month, it ordered a mid-sized business jet from Hawker Beechcraft Corp. for operations in West Asia. The group had revenues of $4 billion in 2006.

According to presentations to the government by Star Aviation, it will operate Italian-French manufacturer Avions de Transport Regional (ATR) with a fleet of five turboprop planes.

It will have operational base in Chennai, together with aircraft maintenance facilities at Hyderabad.

Nine other airline companies had been pending approval till August when the aviation ministry announced a separate category of airlines meant to serve rural India.

After the new policy was announced, some of the airlines-including Star Aviation-awaiting national licenses reapplied for regional permits.

There is no word on the other players, including Air Dravida, Bangalore's Trans India Aviation Pvt. Ltd and Gurgaon-based MDLR Airlines Pvt. Ltd, will get regional permits anytime soon.

"We haven't said no or rejected anyone," said minister Patel, responding to a question on whether other pending players will also be issued regional licenses in the next three months.

"But we have to see-if something goes wrong tomorrow then everyone will blame us. So it's better to do a thorough assessment before-hand."

Government officials are expected to take a wait-and-see attitude before issuing other permits. "Regional doesn't mean money is not involved-regional (airline) will also grow bigger tomorrow. And to become bigger, we have to see what is their potential, evaluate their background," he added.

The minister had earlier said regional airlines would take to the skies in the next six months.

"Regional (aviation) is the future, because there is a lot of opportunity connecting tier II and tier III cities with smaller airlines, ATF (aviation turbine fuel) is cheaper, landing and navigation charges are waived for 80-seater and smaller planes," he had said.

Tax on jet fuel for the smaller planes regional carriers will use is set at a low 4% compared with the 30-40% that national carriers pay for fuel.

Regional carriers based in South India will also have the benefit of operating from less crowded airports.

The new international airports at Bangalore and Hyderbad will be operational by the end of March.

The government's regional airline policy allows such airlines to fly between the cities of Bangalore, Hyderabad and Chennai, unlike other places in India.

"There are number of routes which could support regional airlines in the South like Hubli, Belgaum, Bellary, Salem, Tirupati and Pondicherry, which are less connected," said Paramount Airways managing director M. Thiagarajan.

Anyone with a 20-50 seater aircraft can bring passengers and feed them to the larger airlines in the metropolitan cities," Thiagarajan said.

FMI: http://staraviationindia.com/