KOCHI: Chief minister Oomman Chandy on Monday disclosed that the state government was revisiting its plans
to launch an airline of its own, though it was yet to abandon the project
altogether.
"The Air Kerala project has hit a roadblock. If we were to submit an application to the Centre for the project, we have to have a capital base of Rs 100 crore, as per the present Civil Aviation rules in the country. But it will be a severe embarrassment if we mobilize that much funds as shares and we are unable to get the sanction," Chandy told TOI here.
He said under the present laws an airline can launch international flights only if it had operated domestic flights for five years. "But if the prevailing conditions in the travel industry are indicative we might end up facing a loss of Rs 300 crore to Rs 500 crore by five years. We cannot afford such a massive loss," said the chief minister.
"We have spoken to most of the influential people at the Centre, requesting for a waiver on this condition of five years of domestic flying experience, in the case of Air Kerala. There has not been any response so far from the Centre. Probably they are all waiting for us to put a formal application. But we have to be careful in this case, as we can submit the application only after mobilizing Rs 100 crore. Now we have to look for alternatives," Chandy said.
The consultancy, appointed to prepare the DPR for Air Kerala project has also reportedly made it clear that it would not be economically feasible to operate domestic service alone for five years as stipulated by the current civil aviation laws of the country.
Meanwhile, sources at the Cochin International Airports Limited (CIAL), the parent company of Air Kerala, said as per the reports domestic flights alone might not be viable for a new airline, even at very high occupancy rate as fuel costs account for the lion's share of flight operating cost. There are also fears that NoRKs will not be keen to invest in an airline project if it has to operate domestic flights alone for five years."We are confident that Air Kerala can break even quickly with low cost flights in the international sector. But this may not happen if it has to operate in the domestic sector alone for five years," said Chandy.
The CIAL board meeting held couple of days back had also supported the view that Air Kerala project must be pursued more cautiously, CIAL sources said.
"The Air Kerala project has hit a roadblock. If we were to submit an application to the Centre for the project, we have to have a capital base of Rs 100 crore, as per the present Civil Aviation rules in the country. But it will be a severe embarrassment if we mobilize that much funds as shares and we are unable to get the sanction," Chandy told TOI here.
He said under the present laws an airline can launch international flights only if it had operated domestic flights for five years. "But if the prevailing conditions in the travel industry are indicative we might end up facing a loss of Rs 300 crore to Rs 500 crore by five years. We cannot afford such a massive loss," said the chief minister.
"We have spoken to most of the influential people at the Centre, requesting for a waiver on this condition of five years of domestic flying experience, in the case of Air Kerala. There has not been any response so far from the Centre. Probably they are all waiting for us to put a formal application. But we have to be careful in this case, as we can submit the application only after mobilizing Rs 100 crore. Now we have to look for alternatives," Chandy said.
The consultancy, appointed to prepare the DPR for Air Kerala project has also reportedly made it clear that it would not be economically feasible to operate domestic service alone for five years as stipulated by the current civil aviation laws of the country.
Meanwhile, sources at the Cochin International Airports Limited (CIAL), the parent company of Air Kerala, said as per the reports domestic flights alone might not be viable for a new airline, even at very high occupancy rate as fuel costs account for the lion's share of flight operating cost. There are also fears that NoRKs will not be keen to invest in an airline project if it has to operate domestic flights alone for five years."We are confident that Air Kerala can break even quickly with low cost flights in the international sector. But this may not happen if it has to operate in the domestic sector alone for five years," said Chandy.
The CIAL board meeting held couple of days back had also supported the view that Air Kerala project must be pursued more cautiously, CIAL sources said.
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