Why in 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’s in Today’s Article?

• What an NOC Allows—and How It’s Granted?
• Duopoly Worries After IndiGo Disruption
• Why Regional Airlines Struggle in India?

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.

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.