'Air space only for 6-7 players'

Even as companies, 12 at the last count, plunge headlong into the airlines business in the country, Civil Aviation Minister Praful Patel does not believe the market has space for more than 6-7 national-level carriers.

"There will be a shakeout. There will be about 6-7 national carriers and there will be some regional carriers," Patel told Business Standard.

The statement from the minister comes at a time when India is seeing an unprecedented growth in the aviation sector, drawing attention from aircraft makers and airlines.

It is projected that Indian carriers are expected to generate demand for as many as 200 aircraft in the next 12 months. At the moment, there are 175 aircraft flying in India.

But the government is not considering any steps to put up entry barriers. "We do not want to be restrictive, but we need to be more watchful," Patel said.

According to him, the government is of the view that the present norms have enough safeguards to prevent non-serious players from getting into the business.

"Natural economics does not permit it. There will have to be a shake-out. This is a very cost intensive business and has long gestation period too," Patel said.

As per the existing guidelines, an airline is required to have five aircraft and a minimum paid-up equity of Rs 30 crore to get a licence to operate. Airlines like Jet Airways and Air Sahara have been petitioning the government to raise entry-level barriers by hiking the minimum equity to Rs 250 crore.

Various projections say about 13 airlines want to start operations in the country over the next 12-18 months. Most of them will follow a low-cost, no-frills model.

The airlines that are expected to start services are Air One, Indus Air, Royal Air, East West, Wadia, Kingfisher, Visa, Yamuna, Air-India Express and the low-cost service by Alliance Air.

The civil aviation minister expects a number of small regional players to come up and they will work as feeder airlines for the national players. "The regional players will have a different role to play," he said.