Kochi, the busiest airport in Kerala, will be the base for a new airline that will use ATR-72 turboprop aircraft to connect routes within the state and other tier II and III cities in the country.

The airline, named Air Kerala, revives a two-decade-old ambition of the state's own airline but the challenge for the start-up will be managing operating costs and taking on entrenched rivals who fly bigger capacity planes into the state, a former CEO of a budget airline said. State support in terms of cost concessions and revenue guarantees could help the fledgling business, he added

The project was promoted by UAE-based businessmen Afi Ahmed and Ayub Kallada, and the airline received initial no-objection clearance from the civil aviation ministry.

Ahmed said the airline hopes to start operations from the first quarter of CY 2025 with three ATR-72 aircraft and will have an initial investment of ₹60-100 crore. " We have identified key post holders and we will be applying for air operator permit," he said.

Airline routes

The airline will target routes within Kerala and other cities like Salem, Madurai, Hubli, and Pune based on traffic demand. The airline has prepared a connectivity plan for 53 airports and plans hire 350 personnel in its first year of operations.

Currently, Kerala has four airports ( Kannur, Kochi, Kozhikode and Thiruvananthapuram) and these see more international traffic than domestic.

However, domestic traffic is also growing. Thiruvanathaputaram saw the fastest traffic growth among the four with a 40 per cent rise in domestic passengers for the twelve-month period ending March. The slowest growth in this period of 2.3 per cent was registered by Kannur airport. Kochi and Kozhikode airports witnessed 17.4 per cent and 11.3 per cent growth in domestic passengers respectively.

At present, there is limited intra-state air traffic. IndiGo operates a single daily flight with 72 seater ATR-72 aircraft on Thiruvananthapuram  Kochi-Kannur route. " The flight sees loads of 80-90 per cent," an airport official said. Air India Express flies twice weekly between Kerala's capital city and Kannur. IndiGo also operates ATR-72 flights between Kozhikode and Kochi, besides connecting the cities to Lakshadweep

Industry experts believe the start-up airline will face challenges and need government support to keep an edge. Marketing tie-ups with tourist attractions and wellness centres in the state too will benefit.

Operating costs

"In my view, it will be quite difficult to meet the costs operating with ATR type of aircraft. Limitation of capacity of the planes to match competitive fares would likely be the biggest hurdle- as compared to the well entrenched competition operating with all-economy A320/ B737 aircraft that already connect the state quite well," a former airline CEO remarked.

“There are many traffic segments that one could tap into on the intra-state and inter- state routes. The challenge would be in achieving yields that will make for viable and sustainable operations. There are plenty of trains too - connecting the major cities in the state.” 

“I suppose the state government will do what is in its control to support the airline by providing some cost concessions and guaranteed revenue to help the project,” he added.

Related Topics