Four New Regional Airlines in India: Why Success Is Uncertain Despite NOCs

Regional airlines Latest News

• The Ministry of Civil Aviation has issued no-objection certificates (NOCs) to two new regional airlines—Al Hind Air and FlyExpress—bringing the total number of proposed regional carriers to four. 
• Two others, Air Kerala and Shankh Air, received NOCs last year but are yet to secure Air Operator Certificates (AOCs) and begin flights.
• While the government is keen to expand domestic aviation in one of the world’s fastest-growing markets, the regional airline segment remains high-risk, with a history of more failures than successes.

What an NOC Allows—and How It’s Granted

• Issued by the Ministry of Civil Aviation, an NOC lets applicants set up offices, hire staff, and pursue further approvals. 
• It’s granted after assessing financial soundness, operational plans, and security clearances, and is typically valid for three years.

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Duopoly Worries After IndiGo Disruption

• The announcement of new regional airlines comes weeks after a major operational disruption at IndiGo, which renewed concerns about India’s airline duopoly.
• Together, IndiGo and the Air India group command over 90% of the domestic market, heightening risks from over-concentration.
• In this context, the NoC is being read as a signal to encourage competition, though experts urge caution.

New Entrants Unlikely to Shift Market Shares

• While fresh regional players are a positive signal, experts doubt they will significantly dent the dominance of the two majors. 
• The tougher question is whether these startups can survive India’s unforgiving aviation economics.

The New Regional Players

• Al Hind Air: Backed by the Kerala-based Al Hind Group; plans a regional commuter model using ATR-72 turboprops.
• FlyExpress: Plans yet to be detailed publicly.
• Air Kerala: Envisions an ultra-low-cost carrier (ULCC) connecting tier-2 and tier-3 cities to major hubs with turboprops; despite an NOC last year, it has struggled to induct aircraft—required for an AOC from the Directorate General of Civil Aviation.
• Shankh Air: Promoted by UP-based entrepreneur; aims to operate regional routes within and beyond Uttar Pradesh from the upcoming Noida International Airport, with operations planned in the coming months.

Why Regional Airlines Struggle in India

• Despite a few successes—Star Air, Fly91, and government-owned Alliance Air—India’s regional aviation space has seen many collapses. 
• Past failures include Paramount Airways, Air Pegasus, TruJet, Zoom Air, Air Carnival, Air Costa, Air Mantra, and Air Odisha. 
• More recently, Fly Big suspended operations in October.

Structural Challenges in the Market

• India is a tough aviation market, especially for small carriers. 
• High price sensitivity, thin profit margins, high debt, and dollar-denominated costs (fuel, leasing, maintenance) favour large airlines with scale, efficient fleets, and deep pockets. 
• Most regional airlines lack the financial resilience to withstand shocks.

Demand Constraints at Smaller Airports

• Regional routes often suffer from limited and seasonal demand, while most passenger traffic remains concentrated at major hubs. 
• This makes load factors volatile and route planning risky for small carriers.

Financing and Revenue Limitations

• Without backing from a major airline group, regional carriers struggle to access finance and debt, as lenders perceive higher risk. 
• Short-haul routes also face stiff competition from trains and road transport, and offer fewer opportunities for ancillary revenues like belly cargo.

What Could Improve Viability

• There is cautious optimism that a growing, upwardly mobile middle class could improve regional airline prospects. 
• Success will hinge on lean operations, serving genuinely underserved regions, building dominance in specific geographies, and—crucially—strong financial backing to sustain operations through inevitable downturns.

Source: IE | LM