Fly91, a new regional airline, is betting big on the growth of tourism in and around Goa and the expected expansion of the Indian aviation sector. Regional aviation needs professional players and it is one of the spaces that Fly91 wants to fill, CEO Manoj Chacko told Moneycontrol.
Fly91 will focus on collaborating with larger airlines to provide last-mile connectivity to smaller towns around Goa, said Chacko, an aviation veteran, who was formerly executive vice-president of Kingfisher Airlines.
Chacko joined hands with Harsha Raghavan, former Fairfax India head, to launch Just UDO (just fly) Aviation, which is behind Fly91. Raghavan’s investment firm Convergent Finance pledged Rs 200 crore as the project outlay for the upcoming airline.
Over the next two to three weeks, Fly91 will apply for an air operator permit and hopes to start flying in October-December from Goa’s Manohar International Airport at Mopa with two ATR 72-600 turboprop jets.
Fly91 wants to cater to the short-haul segment (45-90 minute flight duration) and connect underserved places where bigger aircraft cannot land or demand is not viable enough for larger airlines. Edited excerpts:
What was the main motivation behind starting a new airline in India, a historically tough market?
Indian aviation is poised to grow exponentially over the next decade and regional connectivity needs will grow even faster than the overall industry as the country's economy grows and people have more money in their pockets.
We are building an airline in such a way that we want to be the last-mile carrier. We want to provide services like a BSNL, but while making a profit and providing an experience to our customers.
The government's UDAN scheme is clear evidence that the regional connectivity model can work in India and we want to expand on the same model and help people connect.
Most Tier II and Tier III markets are well-established economies where people are willing to spend money to travel by air and the only reason the airports are unserved is that larger airplanes cannot land at those airports and infrastructure is meant for smaller airplanes.
Regional aviation has not returned to pre-pandemic levels and with high ticket prices, may stay muted for the next year. What routes and sectors is Fly91 targeting?
We are interested in cities in Maharashtra, Gujarat and Karnataka, including Hubbali, Shirdi, Nashik, Belgaum, and others.
We have to remember two critical aspects. The first is that we are fundamentally in the transportation industry and our key focus is to ensure that we transport people from point A to B safely, comfortably and in the most economical way.
The second one is to keep things brutally simple and stick to the basics and do them extremely well and not try to reinvent the wheel where not necessary.
The reason air traffic on regional routes has fallen after COVID-19 is that regional airlines have stopped operations. TruJet has stopped operations, and SpiceJet has reduced its capacity on regional routes.
I also believe that people in Tier II and Tier III cities are willing to spend more on air travel but flights are not available.
Affordability is not the issue in tier 2 and tier 3 cities anymore.
When is Fly91 looking to start? What were the hurdles in starting an airline and what challenges do you foresee? How many aircraft do you plan to operate?
We are planning to apply for an air operator permit with the Directorate General of Civil Aviation. We hope to launch the airline in the October-December quarter of 2023. The plan is for Fly91 to operate a fleet of leased 70-seater ATR 72-600 turboprop jets. The plan is to bring six aircraft to the Goa base within the first year.
We plan to induct 6-7 aircraft every year for the next 5-6 years.
Q. Is Fly91 planning to operate as an ultra-low-cost carrier? If so, how do you plan to reduce operating costs?
No, We don't want to label our service as a low-cost carrier, rather we are providing necessary services at a low cost.
We are looking to be a digital carrier and will focus on digitally connecting the customer and we will also offer on-board catering and other amenities.
We are inspired by airlines like Indigo and Air Arabia, which created a simple standardised business model and executed them to perfection and just kept doing it day in and day out with surgical precision and no changes in the plans.
In terms of costs, it's very hard to lower operating costs in a market like India, but the fact that we're operating in smaller airports and need fewer passengers to break even will help rationalise costs and be profitable.
When you operate in airports under the UDAN scheme your cost structures are much lower.
We are not planning to spend a tonne of capital on acquiring a fleet and prime slots as well, which will help us have a lean operating model.
How many pilot and crew members have you hired and how many more would you need to start operations?
We are currently a very small team of professionals including pilots and cabin crew and over the next six months we will look to hire close to 130-150 more individuals across the board.
There have been talks between the government and the industry on unbundling fares. How important is fare-unbundling?
Fare-unbundling is the key to the success of smaller airlines in a cash-guzzling industry like aviation. The fact that the government has heard industry players and made it easier for airlines to monetise all aspects of flying is a major boost to smaller airlines and airports in the country.
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