KOCHI: The recent announcement by Zett Fly’s Air Kerala to launch its airline services, the second by a Keralite over the past few months, indicates a change in the perception that aviation is a risky investment, according to experts.
Aviation sure is a tough business. Thakiyudeen Abdul Wahid’s East-West Airlines that took to the skies in the early 1990s and Shyson Thomas’ Air Pegasus launched in 2014 ceased operations following mounting losses. But the launch of Manoj Chacko’s Fly91 in March this year and the entry of Air Kerala after it received the aviation ministry’s approval last week show a clear change in perception.
“Aviation is a highly capital-intensive industry. However, time being the most valuable resource, there are abundant growth opportunities in aviation, and due to technological advancements in the industry, the risk on investment has become much more manageable. With ample financing opportunities, and a solid business growth horizon, private players are quite interested in reaching for the sky with a bet on aviation,” said an aviation industry expert who wished not to be named.
India’s aviation sector was a national monopoly till the 1990s. The government’s open skies policy in 1992 eased the regulations to expand the commercial aviation sector and gave wings to the private sector. This facilitated the emergence of airlines like ModiLuft, Damania Airways, Air Sahara, East-West Airlines, and Jet Airways. However, many of these newcomers either collapsed shortly after or underwent mergers within the following decade.
Owned by Dubai-based Malayalis Afi Ahmed and Ayub Kallada, Air Kerala — registered under Zett Fly Aviation Private Limited — is expected to commence operations by 2025 in the domestic sector with Kochi as its base.
Once the fleet grows to 20 aircraft, Air Kerala plans to expand to international routes, with Dubai being one of its first international destinations.
“The plan is to operate three ATR 72-600 aircraft, with options for both leasing and direct purchase from manufacturers, in the domestic sector connecting Tier II and Tier III cities with metro cities,” Zet Fly chairman Afi Ahamed said.
“We are currently exploring options in both the leasing market and direct procurement from manufacturers to ensure we have the best possible fleet for our operations. We have plans to purchase or lease either Airbus or Boeing aircraft.”
However, experts believe that operating a low-cost airline will be challenging. There are certain criteria to be followed, such as having a fleet of a minimum of five aircraft, well-planned economics and route planning, to become viable.
Kerala has four airports — Kannur, Kochi, Kozhikode and Thiruvananthapuram — which have a good number of international and domestic traffic.
“Kerala has a huge Gulf connection and many expatriates feel that Indian carriers charge exorbitantly, especially during peak season. This is one of the reasons why an airline by a Malayali to the Gulf is very much needed. A long time ago, people wanted to start an airline owned by the state government to ease ticket fares,” said another aviation expert, Mohan Ranganathan. However, the airline remains a non-starter if it has less than five aircraft, he pointed out.
“The airline will fold up if it starts with just two or three aircraft because all it takes is some bird strike or engine failure and the aircraft is grounded as procuring spare parts will take time. Eventually, the company will have to cancel flights, which will set its downfall,” said Mohanan, a former commercial pilot. “If the company manages to pump in enough funds with at least six aircraft whose spares are readily available, plan their economics and more, Air Kerala can write a success story,” he added.
According to rating agency ICRA’s data, domestic air passenger traffic is estimated at 1.32 crore in June 2024, up 6.3% on a year-on-year basis and 3.7% lower than the May 2024 figure of 1.37 crore. High demand for air service has led to more players showing interest.
Reaching for the skies
Air Kerala is expected to commence operations by 2025 in domestic sector with Kochi as its base
Once the fleet grows to 20 aircraft, Air Kerala plans to expand to international routes
Dubai is likely to be the first international destination owing to huge Malayali population