Fly91: How India’s New Airline can Fly Higher & Longer

Today, on 18th March 2024, a new bird takes its inaugural flight in Indian skies. It is set out to connect the India that is Bharat, not bound by any geographical locations and committed to fly every Indian across 91 (+91 is country code for India) – welcome to Fly91.in !

Fly91, a Goa headquartered start-up regional airline, headed by Harsha Raghavan and Manoj Chacko , ?has got the regulator's approval, plan to start operations with two ATR-72 aircraft, the small turboprop aircraft best suited for regional destinations. It has won rights to operate flights from Sindhudurg, Jalgaon, Nanded and Agatti Lakshadweep to Bengaluru, Goa, Hyderabad and Pune under the government's regional connectivity scheme - Ude Desh ka Aam Nagarik (RCS-UDAN).

As an aviation enthusiast, it's heartening to witness the emergence of a new player in the Indian market. However, it's crucial to observe the strategy of Fly91 as it enters a market known for its challenges, having seen the demise of several prominent carriers such as Jet Airways, Kingfisher Airways, GoAir, TruJet, Air Sahara, Air Odisha, and Air Pegasus. With Fly91 venturing into territories previously explored by some of these carriers, including regional hubs, it faces an uphill battle.

With the exception of IndiGo (InterGlobe Aviation Ltd) , no other carrier has managed consistent success in Indian skies. Venturing into this market demands not only boldness but also acute business acumen and substantial financial backing. Long-term commitment is essential, given the challenges in achieving return on investment (ROI) in the short term. While Fly91 likely has its own strategy for success, executing plans in the boardroom differs vastly from realities on the ground. Here are a few key considerations for Fly91 to ensure sustained success:

Establish Strong fundamentals:

Any business needs a barometer to assess its performance. This barometer must be proactive rather than reactive. Unfortunately, decision-making in the airline industry remains largely reactive, relying on postmortem analysis to identify issues after they occur. By the time management takes corrective action, it's often too late to recover. In my opinion, this is a primary reason why some large airlines have ceased operations. The solution lies in establishing strong fundamentals and implementing a proactive barometer to gauge business health in advance.

This barometer should provide management with insights into revenue generation compared to set commercial targets, identify profitable and potentially loss-making routes, assess the favorability of channel partners, evaluate competition in served markets, and predict changes in market share. Additionally, it should monitor the effectiveness of marketing campaigns.

Obtaining answers to these questions well in advance indicates strong fundamentals and enables proactive decision-making. I wrote a blog on this topic five years ago during my early days in the aviation industry, inspired by the teachings of my mentor, Nayeem Ekbal . I'm sharing it here for your reading pleasure.

Explore Feeder Airline Collaborations: While fly91 is very clear at the moment that they would be serving tier-2&3 in which mainline carriers (Air India and IndiGo) are not the market entrants mostly, Fly91 is not a direct competition to them. It would be a win-win if they look at a potential collaboration with both Air India and IndiGo where Fly91 would become a feeder airline for both these carriers and fly customers to these tier-2&3 cities. This feeder airline concept has been highly successful in United States, where in the large carriers American Airlines, United and Delta airlines have the strong feeder network with regional airlines like Envoy air, Mesa airlines, Republic airways, Piedmont airlines, Endeavour Air which are so integral to the US airline network.

While it is easier said than done but a strong business case has to be build in which each player have the avenues to benefit from this.

Optimize fleet utilization: Aircraft fleet is crucial for airlines, and its efficient utilization is vital for success. The key principle in aviation is that airlines make money when their planes are flying and burn cash when they're grounded. Effective fleet management involves aligning fleet size and composition with capacity needs, demand fluctuations, and revenue potential, considering factors like network design, customer preferences, and regulatory requirements. While Fly91 has chosen the ATR72 for regional operations, optimizing fleet composition as operations expand is essential. Utilizing technology for optimization, including simulation tools and historical data, helps determine the best fleet mix to maximize revenue, minimize costs, and meet service standard

Ensure Robust Network Expansion:

Airline industry is capital-intensive, and no airline can make money with just handful of aircraft and few routes. Eventually, they will have to expand the fleet size and network to see the economies of scale. There’s a proven playbook in the industry on expansion of network by considering various parameters such as demand, competition, costs, revenues, regulations but not every airline gets it right.

Within regional network, Fly91 really doesn’t have much competition in the routes that they plan to operate, and the market is huge to expand into other cities. But they need to factor in the demand for those routes and the price customers willing to pay. In some of the routes, its competition may come from non-aviation transportation such as rail network, road transportation. Since the customers in the market are highly price sensitive, they can move to other options if there are better alternatives.

Consider External Factors: For an airline to operate successfully, numerous external factors must be considered, including airport infrastructure, connectivity to city centers, ground services, and government policies. Since Fly91's routes primarily fall under the RCS-UDAN scheme, and considering that over 50% of allocated routes since 2017 have been shut down, it's imperative for the airline to look beyond UDAN and evaluate routes based on economic viability. Route profitability is crucial for long-term sustainability.

Best wishes to Mr. Chacko and the team on the commencement of operations today, and wishing them clear skies and smooth landings on their journey ahead.