What does it take to start an airline?

Apr 03, 2024 08:34 PM IST

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FLY91 is the latest addition to India’s growing aviation sector that’s looking to connect places that were previously accessible either by road or train

Post-pandemic, India’s aviation sector has grown steadily, and with the addition of new flights in key domestic routes, and new airlines to service regional routes, this is only set to expand further.

FLY91 operates two ATR 72-600 aircraft, and the company is confident they will add six more planes within the next six months. (Image posted on X by FLY91)(HT_PRINT)

While Air India and IndiGo have collectively placed orders for about 1,000 airplanes to feed key domestic and international routes, the regional aviation space is also seeing a capacity addition as new airlines prepare to launch. In 2021, Flybig, headquartered in Gurugram, started operations between tier 2 and 3 cities, offering flights to cities like Shravasti, Hindon, Azamgarh and Pithoragarh. Two years back, IndiaOne Air, another regional carrier headquartered in Ahmedabad, was launched. More recently, on March 18, FLY91, a regional carrier, made its first flight between Goa and Agatti (Lakshadweep). The strategy is to offer flight connections that are within 1.5 hours of flying distance. With a small fleet of two planes, intends to expand to give fliers travelling between smaller cities a viable alternative by adding 30 aircraft over the next five years.

“I have been following a lot of startup airlines around the world and [particularly] in Australia, Canada and the US. Our aviation regulator (Directorate General of Civil Aviation) is actually better,” Manoj Chako, managing director and chief executive officer of the airline, said. Chako spent nearly two years building the strategy of the airline, he said. “You need to create a business plan and then ensure that it is in line with the strategy you have. One has to look into fund creation as the key step. It is crucial to start with strong funds. It is after this that the regulatory processes begin.”

What does it take to launch an airline in India today? HT explains.

How many approvals are required to launch an airline in India?

The regulatory process basically has three parts to it: The first one is applying for a no objection certificate (NOC) to start an airline from the Ministry of Civil Aviation (MoCA), which involves a business plan, request for security clearance for the company directors, share your business plan you must have a minimum paid-up capital requirement for the company and other documents that need to be submitted and then ask for a NOC.

Once the NOC is granted by the ministry, then one needs to apply for an air operator licence (AOP) with the Directorate General of Civil Aviation (DGCA). The process for applying for a licence is exhaustive. It requires the writing of manuals, procedures, training programmes, and another set of guidelines. Once all the guidelines are fulfilled and the regulator satisfied, then the air operator's licence is permitted.

Are the rules similar for regional and scheduled domestic carriers?

No, requirements for national and regional carriers are different. For a scheduled commuter airline (or regional carrier) operating an ATR aircraft, the equity capital requirement ranges from ₹5 crore (up to three aircraft) to ₹15 crore. As far as the aircraft requirement goes, a regional airline is mandated to acquire a fleet of a minimum of three aircraft in two years and five aircraft within five years either by outright purchase or through lease.

When is the crew hired? Is there a minimum number?

Crew hiring starts at least a year before the startup airline plans to operate its first flight. There is no fixed number of crew to be hired. It depends on the expansion plan of the airline. The rule is simple — the airline must have enough crew to be able to take care of the flight operations. In the case of an ATR aircraft, the requirement would be two pilots and two cabin crew members.

Can DGCA cancel or suspend AOP, if the conditions are not met?

Yes, the DGCA can suspend the AOP of an airline if the requirements are not met. However, they can be revived too like what happened in the case of Jet Airways. The DGCA granted the AOP to Jet Airways on May 20, 2022, to help it start full-scale service by October 2023. Jet Airways went through a bankruptcy process and has new owners in Jalan Kalrock Consortium; the airline is yet to start operations due to court cases filed by its lenders.