NEW DELHI, APRIL 28: Even as the government mulls the establishment of a regional airline to improve connectivity to far-flung areas in the North-East of the country, domestic carriers are shying away from North-Eastern skies. Over the last couple of months, full service carriers like Jet Airways and Kingfisher and even no-frills airlines like Deccan have sought to withdraw flights from the region due to the increasing economic unviability of operating there.

“Both the Kingfisher-Deccan combine as well as Jet Airways had asked us for permission to withdraw some of their flights in the region and we have given them approval to rationalise their flights,” said a senior official with the Ministry of Civil Aviation. “The approvals have been given while ensuring that the airlines adhere to the route dispersal guidelines.” Airlines are currently required to deploy 10 per cent of their total flights on such routes, as per CAT II guidelines.

Naresh Goyal-owned Jet Airways, which has already withdrawn some of its flights in the northeast region, has replaced a few of them with its low-cost arm JetLite. “Operations in the North-East are completely unviable. The approximate load factors in the North-Eastern routes have been an average of 60 per cent,” explained a Jet Airways official. “The aviation market dynamics in the region are such that flying on some of these routes suit the low cost carriers more and, hence, we have got JetLite to take over these routes.” Jet now flies to three destinations in the North-East, namely Agartala, Guwahati and Jorhat.

Like Jet, UB Group chairman Vijay Mallya, who runs full-service carrier Kingfisher Airlines, too had asked the civil aviation ministry in February this year to allow Deccan and Kingfisher to withdraw flights on some routes in the North-East region. Officials from the ministry have said that both Kingfisher and Deccan have recently been given the nod to rationalise their services. “Carriers like Deccan and Jet were more than fulfiling their CAT II requirements — in some cases even operating 15 per cent of their total flights on the route. So we have approved some of their rationalisation plans,” the civil aviation official said.

However, experts contend that the only reason airlines continue to operate in the North-East is due to mandatory requirements. “They are flying there only because they have to. For full services airlines, which operate big aircraft and have a very different cost structure, it makes no financial sense to operate in the region,” says Center for Asia Pacific Aviation chief executive officer (Indian subcontinent & Middle East) Kapil Kaul.

He said that even low cost carriers, which typically operate A320s and Boeing 737s, have a capacity of 180 seats — too large a number to make them commercially viable. “In some cases, the load factor is as low as 40 per cent,” he says.

“The route dispersal guidelines need to be done away with completely. Instead, certain fiscal incentives need to be devised so as to make such routes more attractive for airlines to operate on. Otherwise, the already bleeding industry will be in for a very tough time.” India’s airlines posted a combined total loss of around Rs 2,000 crore in 2006-07, say industry estimates.