Vijay Sankeshwar, chairman of VRL Logistics, is finalising plans to start a regional air carrier from BENGALURU, which may result in the birth of a second airline from the city after the launch of the now-defunct Air Deccan 13 years ago.
Sankeshwar and his son Anand Sankeshwar will invest about Rs 1,300 crore in the airline venture over the next three years, putting in Rs 300 crore in equity and raising debt for the balance amount. They will run it independent of VRL Logistics.
“We currently hold 69% in VRL Logistics. (We) will dilute 8-10% and use that money to invest in the aviation business,” Vijay Sankeshwar told ET. The Union Cabinet is expected to clear the national civil aviation policy on Wednesday , which is likely to offer a slew of sops to regional airlines in the form of exemptions such as airport charges, service tax on tickets, and excise duty on aviation fuel.
Vijay Sankeshwar said he was looking at having a fleet of 8-10 aircraft and that he had not yet decided on the type of aircraft or pricing. “We are still working things out and have to get regulatory approvals. We have not yet started negotiation with manufacturers,” he said.
The businessman said he saw huge potential in the regional aviation business as air connectivity in southern India is sparse.
“There is no proper air connectivity to places such as Hubballi or Belagavi. We may introduce services like BengaluruChennai, Bengaluru-Tirupathi, Chennai-Coimbatore, etc. We will limit our operations to the 2-3 neighbouring states,” he said.
VRL Group, founded 40 years ago in Gadag in North Karnataka, is a formidable player in the logistics space with a pan-India presence. The company owns a fleet of 4,253 vehicles and caters to both the logistics and passenger service markets. The group also publishes a Kannada daily.
India’s low-cost aviation pioneer GR Gopinath hailed Sankeshwar’s plans to start a regional airline, saying having more carriers would do a world of good for air travellers.
But he also said that despite the huge potential that exists for regional airlines in India, the industry needs sweeping reforms. “Our fundamental aviation regulations date back to 1930s, and, as a result, only about 70 million domestic tickets are sold, translating to 30 million fliers. We have several airports in India without any flight service,” Gopinath said.
Sankeshwar’s announcement turned investors in VRL Logistics nervous on Tuesday and several rushed to sell their holdings in the firm. The stock lost 20% of its value and hit the lower circuit on BSE and NSE on a day when the benchmark Sensex index closed up 75 points.
VRL Logistics chief financial officer Sunil Nalavadi clarified to the stock exchanges that the company had no plans to commence an airline and that the promoters would float a separate company in their individual capacities for their aviation business. The airline will be run by a professional chief executive. Tom Seaver Authentic JerseyShare This