Foreign carriers have evinced interest in Air Kerala, a state-promoted airline project, expected to fly between the Arabian Gulf countries and the southern Indian state. A tie-up with a foreign airline may help the start-up to fly overseas overcoming regulations which insist five years of domestic operations and a minimum fleet size, said people familiar with the process.
Currently, Air Kerala, with an initial equity base of Rs 200 crore, will be 26% stateowned with non-resident Keralites and business groups holding the remaining shares valued at Rs 10,000 per share. Ernst & Young is helping the Kerala government with a feasibility report on the airline project, which could dent Air India's business on the profitable Gulf sector routes.
Last month, India allowed foreign airlines to buy 49% ownership in domestic carriers opening up possibilities for Air Kerala, which is being floated to offer competitive fares to the state's diaspora of more than 2.5 million in the oil-rich Gulf. Incidentally, the Arab airlines have dominated prevailing talks of foreign interest in India's crisis-hit aviation sector.
"We have received interest from certain foreign parties and we might explore a possible alliance if this helps Air Keralato overcome regulatory hurdles," Kerala industries minister P K Kunhalikutty told TOI. He said the state was currently impressing upon the Centre about the proposed airline with rights to fly to the Gulf, notwithstanding regulatory hurdles. The minister said high airfares between Kerala and the Gulf was snowballing into a "social problem" with many workers unable to visit homes even once in two years. "We have already conveyed our sentiments to the Prime Minister," he added.
Middle East industrialists of Kerala origin — like Ravi Pillai , M A Yousuf Ali and others —were backing the airline venture . The business conglomerates of Pillai and Ali alone employ about 65,000 people from Kerala who would be eager subscribers to the shares of the airline company. "There's overwhelming response from non-resident Keralites. I can promise that we will close the equity funding in just one day," Kunhalikutty said.
CM advocates states' right to run airline
Kerala CM Oommen Chandyhas advanced the case of a federal government's right to start an airline with privileges similar to the national carrier Air India, setting off a debate on aviation sector regulations. "I expect strong opposition from Air Indiato our plans, but we think state governments too have rights to start airlines just like the national carrier," Chandy said in an interview. He pointed out that regulatory hurdles were waived when Air India Express, a subsidiary of the national airline, started international operations citing the interests of the government-owned company. Chandy said Air India's "callous attitude" towards Kerala-origin labourers in the Arabian Gulf was the key motivation behind plans to launch a new airline. "Very often, airfares from Kochi to Europe are cheaper than what Air India charges on the Gulf sector. Flights on these routes are the first casualty whenever Air India is bogged down with its internal problems," he added.
Currently, Air Kerala, with an initial equity base of Rs 200 crore, will be 26% stateowned with non-resident Keralites and business groups holding the remaining shares valued at Rs 10,000 per share. Ernst & Young is helping the Kerala government with a feasibility report on the airline project, which could dent Air India's business on the profitable Gulf sector routes.
Last month, India allowed foreign airlines to buy 49% ownership in domestic carriers opening up possibilities for Air Kerala, which is being floated to offer competitive fares to the state's diaspora of more than 2.5 million in the oil-rich Gulf. Incidentally, the Arab airlines have dominated prevailing talks of foreign interest in India's crisis-hit aviation sector.
"We have received interest from certain foreign parties and we might explore a possible alliance if this helps Air Keralato overcome regulatory hurdles," Kerala industries minister P K Kunhalikutty told TOI. He said the state was currently impressing upon the Centre about the proposed airline with rights to fly to the Gulf, notwithstanding regulatory hurdles. The minister said high airfares between Kerala and the Gulf was snowballing into a "social problem" with many workers unable to visit homes even once in two years. "We have already conveyed our sentiments to the Prime Minister," he added.
Middle East industrialists of Kerala origin — like Ravi Pillai , M A Yousuf Ali and others —were backing the airline venture . The business conglomerates of Pillai and Ali alone employ about 65,000 people from Kerala who would be eager subscribers to the shares of the airline company. "There's overwhelming response from non-resident Keralites. I can promise that we will close the equity funding in just one day," Kunhalikutty said.
CM advocates states' right to run airline
Kerala CM Oommen Chandyhas advanced the case of a federal government's right to start an airline with privileges similar to the national carrier Air India, setting off a debate on aviation sector regulations. "I expect strong opposition from Air Indiato our plans, but we think state governments too have rights to start airlines just like the national carrier," Chandy said in an interview. He pointed out that regulatory hurdles were waived when Air India Express, a subsidiary of the national airline, started international operations citing the interests of the government-owned company. Chandy said Air India's "callous attitude" towards Kerala-origin labourers in the Arabian Gulf was the key motivation behind plans to launch a new airline. "Very often, airfares from Kochi to Europe are cheaper than what Air India charges on the Gulf sector. Flights on these routes are the first casualty whenever Air India is bogged down with its internal problems," he added.
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