Paramount Airways to take wings in Aug

Paramount Airways will kick off its domestic airline operations in August 2005. The airline, which has classified itself as a premium service, low-cost scheduled airline, will fly only virgin routes between secondary cities and metros, and between secondary cities.

The airline has leased five new aircraft for $138 million (about Rs 600 crore) "� two Embraer 170s and three Embraer 175s "� which are to be delivered over a 12-month period by the Brazilian manufacturer, Embraer.

Paramount plans to operate about 30 flights a day in the next one year, and the company's business model aims to occupy the gap between low-cost carriers which primarily use ATRs with a capacity of up to 70 seats, and carriers which use the bigger 737s and A320 planes.

"There is a lot of potential to fly across the country that is beyond the range of ATR but not viable for 737s and A320s. The Embraer is a jet type aircraft with the comfort of an A320 or 737 with no cramped feeling. It is comparable to any mainstream aircraft," said M Thiagarajan, managing director, Paramount Airways.

Paramount Airways is primarily targeting business travellers and will sell its tickets through the internet, call centres and travel agents.

Thiagarajan said that Paramount's business plan has tried to offset the infrastructural constraints in airports in India as well as the shortage of good quality support staff.

It will be headquartered at Coimbatore airport, where it has set up its own hangar and aircraft maintenance facilities. Embraer is also planning to set up a warehousing facility in India that will stock spare parts.

It will also receive engineering support for two years and initial pilot support from the Brazil aircraft manufacturer. Thiagarajan said Embraer's support services would be covered by the $138 million it cost Paramount to lease the aircraft.

On hiring pilots, Thiagarajan, a licensed pilot himself, said that the company had hired pilots outside the civil aviation industry, who would be guided by Embraer's team for a while.

The viability of Paramount's operations depend on the advantages provided by the new generation Embraer 170 and 175 aircraft. While they cost twice as much as ATRs, they are more powerful and their flying range is longer.

This is expected to give the company the leeway to cover its route without stops. Also, the turnaround time is shorter, and they would not require parking slots in metro airports, said Thiagarajan.

The choice of the Embraer E-jet family is expected to provide business class comfort at lower operating costs which the airline plans to leverage to offer competitive fares. All 70 seats in the Embraer 170 will be business class while the Embraer 175 will have 11 first class seats and 64 business class seats.

The business class pricing is expected to be much lower than the economy fares of full-service airlines and only slightly higher than that of no-frills airlines. Thiagarajan said that tickets would not be auctioned. The only concession would be in the form of a dilution model like the apex fare.

Paramount Airways is promoted by Madurai-based textile manufacturer, Paramount group. Thiagarajan said that Paramount Airways is a private company that plans to fund the business only through equity. "We are a zero-debt company," he added.

About 10-15 per cent of the revenue is expected to come from cargo with each flight having a capacity to carry six to seven tonnes per day.

As the airline plans to fly virgin routes, it does not have to meet the government-imposed commitments to fly a given number of unviable routes.