The aviation sector in India expects new entries. The Indian government has approved “Al Hind Air and FlyExpress” as new entrants in an attempt to ensure that air transport in India becomes even more reliable, in the wake of a recent operation crisis experienced by the biggest airline in India, “IndiGo”.
The two airlines have got their No Objection Certificates from the Ministry of Civil Aviation this past week. This indicated in the tweet by the Civil Aviation Minister, K. Rammohan Naidu, stating that the government wants new players in the aviation industry in the fastest-growing aviation market in the entire world.
Why is this approval significant?
The aviation sector in India is highly concentrated. Currently, IndiGo Airlines and Air India Groups dominate the aviation sector in India. They together control almost 90% of market share. The Air India Groups would comprise Air India and Air India Express. IndiGo is over 65%.
The aviation industry has faced a critical situation in itself in the early months of this year because of the cancellation of thousands of flights from IndiGo that has left millions of passengers stranded along with the disruption in baggage systems at airports. The government in itself is involved in this crisis due to strict regulation because it has called the top management of the airline company in front of the DGCA committee.
The situation has also highlighted the dependence that is evident in the Indian airline industry and the risks that pose to the safety of air passengers in the event that the leading airline company defaults.
What is new in these carriers?
Al Hind Air, formed by the Kerala-based Alhind Group, will begin its operations shortly as the new commuter airline. It had planned to begin its operations by means of the ATR 72-600 aircraft. Al Hind Air, which will operate from the port city of Kochi, has been teaming up with Cochin International Airport Limited to establish an operations base. Al Hind Air announced its plan of expanding its operations to the international market.
FlyExpress, as yet unannounced regarding its fleet and network plans, will likely operate to unserved markets and regions, as will all aviation strategy plans designed by the governing body.
Shankh Air, a new venture from Uttar Pradesh, also received its NOC and is set to commence its services from 2026.
The role of the Government in the promotion of competition
Mr. Naidu said, “What our ministry wants to see is an improvement in the number of airlines operating in the country.” He took an example from the ‘UDAN’ project, saying “What it has achieved is that new airlines like Star Air, India One Air, Fly91 have started operating services between tier-2, tier-3 cities.”
Currently, there are nine domestic operators in the Indian market, but Fly Big has suspended the schedule operating services in October.
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What happens next
Although the NOC is an important step, Air, Al-Hind, and FlyExpress have to obtain Air Operating Certificates (AOCs) in order for the sale of tickets, as well as the commencement of air transport operations, to commence as per the DGCA norms.
Industry analysts have put across the perspective that the aforementioned approvals are a clear indication to the government that they want to see a degree of competition within the domestic market and definitely do not want to see a rising degree of monopoly power regarding the airline industry. On the other hand, they feel that cost control will be very important if they are to remain a major player within the Indian aviation industry as they know the Indian aviation industry is a very cost-sensitive industry
Due to growing requirements in the domestic airline market and the growing expectations of consumers, the government is now relying on the emerging players to make it sustainable. With less dependence on ‘duopoly’ and maximum use of regional airlines, the government is going to make the Indian aviation sector more efficient and stable.
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