Till date, regional airlines in India have been looked upon in poor light, largely because of the past and the present. No regional airline in India has survived long, collapsing under the pressures of mismanagement and poor planning. Even today, the way in which regional airlines are both managed and run is disappointing.
The ministry’s proposal for Scheduled Commuter Airlines (SCAs), and the associated benefits, are huge. For one, SCAs will be able to enter into code shares with other airlines. This will be the starting point for capacity purchase agreements (CPAs) as seen in the US of A where mainline airlines contract commuter or regional airlines to offer last airport connectivity. It turns into a win-win for both mainline and the regional or commuter airline.
Yet, the paid up capital requirement, as stipulated by the ministry, reduces entry barriers. This will allow the “not-so-good” to enter the business, mismanage the business, ultimately leading to a collapse, non-payment of salaries, and the like. So how much does an airline require to run?
It depends on many factors. We look into market lease rates of popular aircraft, and the amount of money the airline is going to lose over a period of 2 years. The projections are based on statistical data derived from many airlines, and will make you appreciate how much an airline really needs. We also expand the aircraft set to include other, smaller, in production turboprops.
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