New Indian carrier Air Kerala closer to launch with plans to expand to UAE by 2026

Plans for a new Indian airline, Air Kerala, are gaining ground with the company now targeting the launch of its domestic operations in the first quarter of next year and expand internationally by 2026, the UAE-based businessman spearheading the company has said.

The company behind the airline, Zettfly Aviation, has received the initial no-objection certificate (NOC) from India’s Civil Aviation Ministry to operate air transport services, its chairman Afi Ahmed told The National.

"The first step is the NOC, it's one of the biggest tasks and that task is now covered," he said.

The next steps will be to focus on the technical aspects, flights, contracts for the engineering companies, with all of that expected to be fulfilled in "around six to eight months".

Being set up as an "ultra low-cost airline", Air Kerala plans to start out with three ATR 72-600 aircraft and grow its fleet to 20 for international expansion.

The company is exploring the possibility of leasing the aircraft or buying the planes.

The company will require an estimated 60 to 100 crore Indian rupees ($7.1 million to $11.9 million) in funding initially, with the amount rising to 250 crore rupees to 300 crore rupees for growth when it expands its route network to international destinations.

The idea of Air Kerala was first proposed by the Kerala state government in 2005 and the airline was registered as a fully owned subsidiary of Cochin International Airport in 2006.

Although it was announced with much fanfare and was touted as one of the most popular and ambitious projects to support Keralites living abroad, the project was shelved several times by successive governments.

Mr Ahmed, founder of Dubai tourism agency Smart Travels, last year bought the domain name airkerala.com for Dh1 million ($270,000) and then decided to revive plans for the airline.

Its proposed launch comes amid growth in India's aviation sector. Domestic traffic is forecast to grow 6 per cent to 8 per cent annually to reach up to 164 million airline passengers for the year ending March 31, 2025, aviation consultancy Capa India said in a report this month.

Meanwhile, international traffic is projected to grow at a slightly faster pace of 9 per cent to 11 per cent year-on-year, to reach up to 78 million passengers during the period.

Initially, Air Kerala plans to serve cities within the state of Kerala as well as across India that are not currently well-connected.

The airline's biggest selling point will be its ultra-low-cost model, Mr Ahmed said.

Another unique selling point will be "the timing" because "we will make sure that we will be on time", he added.

The company is open to a public-private partnership with the Kerala state government, in case they are keen to tie up, the businessman said.

It is also open to teaming up with expatriates, as well as external funding.

"If there is somebody who wants to join with us because we are expanding ... then I can [achieve] the plan a little bit faster," he said.

In terms of international expansion, the company is confident the huge number of expatriates from Kerala will support its growth.

The number of emigrants from the Indian state stood at more than 2.2 million, according to the Kerala Migration Survey 2023, which was released last month.

The size of global Malayali diaspora has grown to reach an estimated five million, the report found.

The Gulf remains the preferred destination, with 80.5 per cent choosing the region and the UAE topping the list in terms of countries.

Air Kerala is not keen on focusing on only one specific city within the UAE, Mr Ahmed said.

"If we are getting an opportunity from Fujairah also, we will do it ... if you look at who is leading the market, it's [driven by] price ... that's the reason we will make sure that our costs are ultra-low."

However, final decisions on pricing and destinations will be taken at a much later stage and will depend on how its international expansion strategy shapes up.

For now, the company expects to be in the red for two years after launching operations.

"Third and fourth year [is when] we are going to start to get profits," he said.