At a time when demand for air travel is growing in India, a former Kingfisher Airlines executive and the former India head of Prem Watsa’s Fairfax Financial are joining hands to launch a new regional carrier.
The new airline, to be called Fly91, will be headed by Harsha Raghavan, managing partner at Convergent Finance LLP, who will be the chairman, and Manoj Chacko, who will be the CEO. Chacko has had three decades of experience in the airline, travel and allied industries and has held executive positions in Kingfisher Airlines, Emirates, SOTC Travel and WNS Global Services.
During his stint at Kingfisher, Chacko helped the airline become India’s second-largest airline by market share by building out a strong pan-India network and enhancing connectivity into regional markets. The airline shut operations in 2012.
Raghavan founded Fairfax's investment activities in India as CEO of Fairbridge Capital and was the director of Fairfax India between 2010-2018.
Fly91 will operate in the short-haul segment only, where flights last between 45 and 90 minutes and will serve India’s regional airports.
According to the airline, 30 per cent of India’s domestic passenger traffic originates from regional airports, and it says the segment is so far under-served by existing airlines. Goa will be the base of Fly91. Incidentally, Goa’s second airport recently opened in Mopa.
Just UDO (which means just fly) Aviation Private Limited, has applied for a no-objection certificate and for requisite security clearances from the ministry of civil aviation. It hopes to begin operations by December 2023.
“The India growth story goes beyond five metros, with nearly 50 cities having a population of more than one million. Manoj’s vision to serve these cities and his decades of experience in India’s airline and travel sectors makes him the kind of passionate entrepreneur whose idea we can back with our capital,” said Raghavan of Convergent.
Convergent and funds advised by Convergent will initially invest Rs 200 crore in the airline. Convergent will also work with Fly91 on matters such as operations, capital allocation, and long-term business strategy as a co-founding partner.
According to a report, Fly91 will operate a fleet of leased 70-seater ATR aircraft.
The Narendra Modi-led government has been pushing hard to boost regional air connectivity, through its regional connectivity scheme (RCS) – Ude Desh Ka Aam Nagrik (UDAN), launched in 2016. It has earlier indicated plans to operationalise 100 airports by 2024.
As on November 30, 2022, 453 routes had commenced, operationalising 70 airports including two water aerodrome and nine heliports, according to the civil aviation ministry. More than 2.15 lakh UDAN flights had operated and over 1.1 crore passengers had availed the benefits in UDAN flights, it further said in an update last month.
Driven by the growing small-town penetration air traffic in India grew at a 12 per cent compounded annual growth rate between 2015-2020. However, the Covid-19 pandemic hit the sector hard in 2020 and 2021. In the last few months, there has been a strong revival in airline passenger traffic as post Covid travel has picked up in a big way.
According to ICRA, between April-December 2022, domestic passenger traffic grew 63 per cent year-on-year to touch 9.86 crore.
Several airlines are betting big on the revival in air travel. Akasa Air, backed by late billionaire investor Rakesh Jhunjhunwala, had started flights last year. Tata Group, which acquired Air India last year, is in talks with plane makers Airbus and Boeing to place a large order, which reports have said could be as many as 500 aircraft.
Fly91 will compete with not just the large carriers like Indigo and SpiceJet, which have in recent years added many flights on regional routes, but also regional carriers like Star Air and FlyBig.
Several airlines like Air Carnival, Air Costa and Air Pegasus in the past decade started airlines betting on the regional demand potential, but eventually shut down.