India's Newest Airline Looks to Fill Void From Second and Third-Tier Cities

25.08.2023 - 14:19 / skift.com / Peden Doma Bhutia

Fly91, a new Indian airline named after the country’s telephone code, is aiming to take advantage of India’s rising middle class by focusing its services on second and third-tier cities.

The carrier is hoping to start operations around the last quarter of this year. 

Heralded by Manoj Chacko, the former executive vice-president of the now-defunct Kingfisher Airlines and the man who set up the India business for risk management group Fairfax group, Fly91 will be the first airline to be based in India’s southwestern coastal city of Goa.

India-based investment firm Convergent Finance will anchor Fly91’s initial $25 million investment. Harsha Raghavan, managing partner at Convergent Finance, will be Fly91’s Chairman while Chacko will be the CEO.

Calling the announcement of a new airline a welcome move, Vishal Bhadola, an aviation consultant based in India, said, “The fact that the airline is being conceptualized by a mix of promoters from airline and finance industries, will help stakeholders understand and deal better with the capitalization challenge.”

Bhadola added that India’s fast-growing cities of 350-million strong middle class population and the government’s focus on improving airport infrastructure in Indian hinterlands and schemes such as the Regional Connectivity Scheme would certainly boost investor confidence. 

However, he warned that the regional airline model in India has been dotted with failures because of under capitalization, unoptimized business model, unsuitable aircraft selection and other pitfalls.

Speaking to Skift, the Fly91 CEO said the airline will serve India’s regional airports, from where about 30 percent of India’s domestic passengers originate and which has so far been underserved by existing airlines.

“In spite of having the spending power, when people from smaller town and cities need to get to a bigger city, they’d either have to drive for around 10 hours or take an overnight train. That’s the space that that we are focusing on.”

Close to 58 airports still fall under the Indian government’s Regional Connectivity Scheme — which are airports which are unserved or underserved. “We see that as a huge opportunity,” Chacko said.

Among the 131 operational airports in India, around 20 percent do not have flights serving them. The opening up of another 100-plus airports by 2026 highlights a huge focus on airport infrastructure.

Flying is concentrated on some popular routes in India as almost 68 percent of the domestic traffic touch one of the top 10 airports, there’s a need for tier two and tier three cities to get into the air connectivity map, according to Chacko.

With less than five percent of seat capacity in India deployed on regional routes, Chacko said in mature markets,