Local carriers wrestle with cashflow crunch

Even as the central government is bent on promoting affordable air travel in India, small private aircraft carriers have begun to be forced to the wayside.

Published: 20th June 2017 01:33 AM  |   Last Updated: 20th June 2017 02:48 AM   |  A+A-

Express News Service

CHENNAI: Even as the central government is bent on promoting affordable air travel in India, small private aircraft carriers have begun to be forced to the wayside. On Sunday, the Directorate General of Civil Aviation notified that it had cancelled the operating licenses of Air Carnival — a Coimbatore-based single aircraft carrier.

According to the DGCA, the reason behind the cancellation was that the carrier had been unable to operate flights since grounding its single aircraft earlier this year, in April. Sources in the DGCA say that the company has been plagued with financial problems. The DGCA had also suspended licenses of regional carriers Air Costa and Air Pegasus for having been unable to operate flights.

“Its aircraft has been deregistered and seized by the lessor. This is very similar to what happened with Air Pegasus, but the latter has managed to find some financial backers,” pointed out a senior industry analyst.
Air Pegasus had been deprived of its Air Operator Permit (AOP) in March 2016, after facing similar trouble with the lessors of its two aircraft. While not in operation since July 27, 2016, the airline said in April that it has applied for permits to import an aircraft and begin operations again.

Air Costa -- the third carrier out of the four operating under the regional AOP, announced in February this year that it would suspend its services indefinitely for want of cash and non-payment of dues to aircraft lessors. “Out of the four regional aircraft carriers, only TrueJet is still flying. This is a matter of concern, since small regional carriers like these are the mainstays of any expansion in civil aviation — especially to small tier - II and tier - III towns,” pointed out a senior aviation industry veteran. “The government needs to do more to ensure profitability to smaller players, or schemes like UDAN may well fall flat.”

Stuck in the doldrums

Out of the four Regional Aircraft Operator Pemits provided by the DGCA to aircraft carriers, three holders of the permits have currently been grounded — primarily because of trouble with cash flow and an inability to keep aircraft lessors paid. With Air Costa, Air Pegasus and Air Carnival grounded, TrueJet remains the only operational regional AOP holder.

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