Whalesbook
Regulatory Greenlights Face Scrutiny
India's civil aviation minister recently announced preliminary approvals for three aspiring airlines: Shankh Air, Alhind Air, and FlyExpress. These 'no-objection certificates' (NOCs) are the first step toward obtaining an air operator certificate (AOC) from the Directorate General of Civil Aviation (DGCA). The announcement fueled hope in a market currently dominated by IndiGo and Air India, which together command approximately 90% of the domestic share.
FlyExpress: Troubled Past, Uncertain Future
FlyExpress, operating under the brand of ABC Aviation and Training Services Ltd, presents a history fraught with issues. Investigations reveal that directors of its parent company have faced court convictions. The company itself shows a decade of zero revenue, accumulated losses exceeding ₹39 crore, and past failed attempts to launch an airline. Allegations persist of collecting fees from aspiring pilots without delivering on promised roles. Despite claims of a new corporate ownership, no public record supports this. The company plans a press meeting in March.
Shankh Air: Ambitious Plans, Unclear Funding
Shankh Air, founded by Uttar Pradesh-based businessman Sharvan Kumar Vishwakarma, appears ambitious but financially opaque. Vishwakarma's trading firm, Shankh Trading Pvt. Ltd., shows significant revenue and profit, but the airline's funding sources remain undisclosed. Vishwakarma, who started with driving a tempo, now boasts a luxury car collection, funded by loans. Aviation experts caution that starting an airline requires substantial capital, at least ₹80-100 crore, a figure not yet transparently accounted for by Shankh Air.
Alhind Air: Capital Shortfall Amidst Growth
Alhind Air, backed by the established Alhind Group, seems to have stronger corporate ties but faces a critical capital deficit. The airline's paid-up capital of ₹10.10 crore falls significantly short of the DGCA's stipulated minimum requirement of ₹100 crore for an NOC, or the graded amounts based on aircraft type. The airline is also embroiled in arbitration proceedings and has reportedly placed employees on unpaid leave, signaling early operational challenges.
Calls for Stricter Norms
The history of failed airlines in India, with nearly 29 out of 45 private carriers ceasing operations since 1991, prompts calls for more stringent regulatory oversight. Experts suggest increasing capital requirements to ensure only financially sound entities enter the market. While the DGCA's process involves thorough checks on capital, business plans, and promoter antecedents, the current landscape suggests potential loopholes that may need addressing to foster sustainable competition.