Wind under the wings for regional carriers

Throwing open the aviation sector to foreign airlines will boost the prospects of regional carriers Air Pegasus as well as Flyeasy, who are learnt to be in talks with two major Gulf carriers for investments.

Industry sources told BusinessLine that one of the airlines Air Pegasus is learnt to be in negotiations with Emirates, which might pick up a substantial stake in order to quickly ramp up its fleet strength.

Also, since the regional airline is not listed on the stock exchange, Emirates does not need any regulatory approval or go in for an open offer.

However, Air Pegasus is not keen on selling the entire stake and would want to retain management control, the sources added.

In an earlier interview with BusinessLine , Shyson Thomas, Managing Director of Air Pegasus, had said that the airline was in talks with a few Gulf carriers for picking up a stake.

The Bengaluru-based airline is also planning to raise ₹200 crore to expand operations and add more aircraft. At present, the airline operates three ATR 72-500s, flies to six cities and operates 16 flights daily.

Thomas said the carrier wants to expand its fleet to 50 aircraft in five years but with the Centre allowing 100 per cent FDI in the airline sector, it will be able to add more aircraft if it sells a stake to another airline.

The airline is owned by Décor Group of Companies, which currently provides ground handling services to Indian and foreign carriers.

Flyeasy is yet to become operational but with Air Arabia showing interest, it will be able to take off sooner than later. A top official of the airline said two other Gulf carriers are also keen to invest. “We are close to getting all the necessary approvals to start operating our flights,” he said.

“The opening of FDI will help bring in much needed cash, aircraft fleet and best practices. We may see its positive impact over 6-12 months,” Amber Dubey of KPMG said. The days of micromanagement in aviation are gradually getting over, he added. 

Rahul Gangal, Partner, Aerospace and Defence at the Munich-based global strategy consulting firm Roland Berger, said the Centre is very keen to make the country an attractive investment destination and the new policy is a step in that direction. “It is actually a logical step. It will help all the stakeholders to leverage the sector as much as possible,” he said.

Gangal also said the slew of announcements is a well thought out move and not a kneejerk reaction. “These were work in progress and some of these decisions are a fallout of these initiatives,” he pointed out.