India may soon get 4 new regional airlines, but their success isn’t guaranteed

Source: The post  “India may soon get 4 new regional airlines, but their success isn’t guaranteed’’ has been created, based on “India may soon get 4 new regional airlines, but their success isn’t guaranteed” published in “Indian Express” on 27th December 2025.

UPSC Syllabus: GS Paper-3- Economy

Context: The Ministry of Civil Aviation (MoCA) has recently issued No Objection Certificates (NOCs) to Al Hind Air and FlyExpress, allowing them to enter the Indian aviation market. Air Kerala and Shankh Air already have NOCs but are yet to receive Air Operator Certificates (AOCs), which are required to commence operations. The government aims to increase domestic connectivity, particularly in regional routes, as India is among the fastest-growing aviation markets in the world.

Current Market Scenario

1. The Indian aviation sector is dominated by IndiGo and the Air India group, which together control over 90% of the domestic market share.
2. The regional airline segment has historically witnessed a high failure rate, with several airlines such as Paramount Airways, Air Pegasus, TruJet, Zoom Air, Air Carnival, Air Costa, Air Mantra, Air Odisha, and Fly Big failing to sustain operations.
3. Only a few regional airlines, including Star Air, Fly91, and the government-owned Alliance Air, have managed to maintain stable and viable operations.

Challenges for Regional Airlines

1. Financial Constraints
   1. Regional airlines face high operational costs, most of which are dollar-denominated, making profitability difficult.
   2. The segment has low profit margins and limited access to finance, increasing the risk of operational instability.
   3. Smaller carriers often lack the financial strength to absorb external shocks, unlike larger airlines with deep pockets.
2. Market Limitations:
   1. Smaller airports often witness inconsistent passenger demand due to high seasonality and limited business or leisure travel.
   2. The majority of passenger traffic is concentrated at major airports, leaving smaller airlines with a relatively smaller market share.
3. Competition and Alternative Transport
   1. Distances typically served by regional airlines have viable alternative transport options such as trains and roadways, which reduces the potential passenger base.
   2. Regional airlines often struggle to generate ancillary revenue from sources like cargo, which larger airlines use to improve profitability.
4. Operational Challenges
   1. Regional airlines commonly operate smaller aircraft, such as turboprops, which may limit operational scalability.
   2. Compliance with regulatory requirements, including AOCs and aircraft induction, can delay the commencement of operations.
   3. Maintaining operational efficiency and stability in a price-sensitive market remains a significant challenge for new entrants.

Opportunities for Regional Airlines

1. Regional airlines can focus on underserved areas and tier-2/tier-3 cities where travel demand exists but is neglected by major carriers.
2. Adopting lean and cost-efficient operations can help mitigate financial pressures and improve sustainability.
3. Securing strong financial backing is critical to absorb market volatility and ensure long-term viability.
4. Creating a regional niche presence rather than directly competing with dominant carriers can enhance chances of success.

Way Forward

1. The government can provide financial incentives and subsidies for regional airlines to improve viability.
2. Encouraging public-private partnerships can help strengthen regional connectivity and operational efficiency.
3. Development of regional airport infrastructure is necessary to ensure smoother operations and higher passenger throughput.
4. Airlines should leverage digital technologies for ticketing, marketing, and operational efficiency to reduce costs.
5. Strategic alliances with major carriers can provide feeder traffic and improve financial sustainability for regional airlines.

Conclusion: The entry of Al Hind Air, FlyExpress, Air Kerala, and Shankh Air may improve regional connectivity and provide more options for passengers. However, due to financial, operational, and market challenges, the success of these airlines is not guaranteed. Only airlines that combine strategic planning, financial resilience, operational efficiency, and government support are likely to survive and thrive in India’s competitive aviation market.

Question: Examine the reasons behind the high failure rate of regional airlines in India and suggest measures for their success