Fast-growing Tier II and Tier III cities in India can now dial on India’s newest regional airline, Fly91. As unique as it may be, Goa’s newly launched Manohar International Airport is home to the carrier, and from here does the airline's objective of connecting regional India begin, or 'Bharat unbound’, as the start-up carrier boldly states.

Fly91 made its inaugural flight to Bengaluru from Goa back in March, and through India’s dedicated regional connectivity scheme, RCS UDAN, the meat of Fly91's network revolves and will continue to build over time.

Two ATR 72-600 (VT-FIC and VT-FIB) with an average age of 7.5 years under a lease are the first to take the airline to the skies. Both feature 70 seats to cater to the low but growing demand from India’s smaller towns. The type allows a perfect platform to test and grow upcoming markets through frequencies with progressive capacity.

Manoj Chacko, CEO of Fly91, claims the idea of setting up the airline roots back to nearly a decade ago. I speak to him on the operational and business fronts of his carrier. 

Siddharth Ganesh: How happy are you with the timing of Fly91's launch, and why?

Manoj Chacko: I am extremely excited to see FLY91 take off in our effort to make air travel more accessible as part of our vision for Bharat Unbound. FLY91 is aligned with the goal towards offering last mile connectivity and making air travel in India accessible, safe and reliable. We aim to be part of India’s ongoing economic transformation by creating robust regional connectivity which is crucial to economic growth. The first two months of commercial operations have been encouraging with FLY91 operating across six destinations - Goa, Agatti, Hyderabad, Bengaluru, Jalgaon and Sindhudurg.

What made you pick Goa as home?

We are a pure play regional airline that is currently based out of Manohar International Airport. Our headquarters is at the Kadamba Plateau in Goa and our first base is Mopa. We picked this state because Goa is the 8th busiest destination in the country.

Goa is the capital for meetings, incentives, conferences and exhibitions. International charters are coming to Goa. Goa is a great wedding destination. So it ticks a lot of boxes. And that’s one of the key reasons why we picked Goa as the first base.

Goa is also a wonderful place to work out of. It's an appealing place to our staff and crew to work from. It's especially an attractive place to be based at for pilots - both Indian residents and expats - many of whom have a second home here in Goa.

Goa gets its own airline for the first time. This is the first time that a greenfield airline has started in a greenfield airport, anywhere in this country. We are very proud of this achievement.

What is Fly91's competitive advantage today and how are you different from any other Indian airline, especially from a passenger's point of view?

Everyone is aware of India’s booming aviation industry, the increasing number of airports, improvements in the quality of life and, consequently, the increase in people’s propensity to spend. People from smaller towns are aspirational, those in big cities want to visit old towns and there is so much to see. Making air travel accessible and seamless is probably the most important requirement of a passenger from Tier II and Tier III cities and that is what we aim to deliver. 

Our in-flight experience is hassle-free and celebrates our regional connection to the state of Goa. Our passengers can enjoy a variety of in-flight amenities for a flat fee of Rs 100, including an assortment of snacks and beverages inspired by regional fruits from the Goa and Konkan region. Options range from Aam Panha Surprise to Classic Kokum Magic, Exotic Jamun Surprise, Tangy Bimbli Delight, Divine Mango Fantasy, and more. Additionally, passengers can relive nostalgia with an Amar Chitra Katha onboard for the same fee. This is something unique to FLY91. 

The Indian passenger remains price conscious. He or she is looking for value. The ATR is the most fuel-efficient aircraft that exists today. It offers better fuel efficiency than a larger aircraft which offers us a cost advantage over other players. The cost savings benefits will trickle down to our passengers.

                                     © Fly91

As a new regional carrier relying on the UDAN scheme, how would you describe this space? 

UDAN is about subsidy and VGF (viability gap funding), which is welcome, but our business model is built on regional connectivity. We want to leverage UDAN but if UDAN is not there tomorrow, our operations will still remain feasible.

When the UDAN Scheme was announced, 52 cities were put up for bidding. We did a very detailed study, and we picked up four cities by looking at the surroundings and infrastructure. Sindhudurg and Jalgaon are great examples of destinations with near zero connectivity. So for example, at Sindhudurg there are just four flights a week, but got beautiful infrastructure, pristine beaches, a great destination to go to, but with zero connectivity. Similarly, when we look at Jalgaon, an extremely well-to-do city with a good propensity to spend, people from there go all over the world, but there's no air connectivity nor a good airport. When we bid for Agatti Islands, nobody knew where Agatti was. We studied all these markets very carefully. What is looked at is a mix of traffic — tourist traffic, and the second is visiting friends and relatives traffic. Goa has its own kind of traffic — the state is connected well by airlines but everybody has got a ‘tourist schedule’. The schedule from Goa never meets the requirements for a regular person living in Goa and wanting to go to other cities, so we will cater to that as well.

What would be challenges for FLY91 as an UDAN airline that's rather different from a mainstream airline?

Our business plan is not built purely on UDAN. We are already operating flights to Bangalore, Hyderabad and Goa. In the future, we envision connecting Pune, Mumbai, Noida and Lucknow. We will be opening a new base annually over the next 5 years, and from every base, we are going to be covering between 8-10 cities. Some of these will be commercial routes. 

An obvious question, how do you plan on competing with IndiGo who also use the ATRs aggressively on regional routes and are known to drive players out. For example, their launch of the Agatti just after FLY91 announced so.

As we said earlier, we are here to co-exist and not in competition with all forms of transportation including airlines. We are not here to compete with anybody. We want our airline to allow people to get into those cities where air service is lacking, so the focus is on getting into underserved cities and providing last-mile connectivity. 

Competition will always exist, and there are various strategies that we have. When it comes to niche sectors, we are the only player or maybe one of two players out there. Any sector which is under 90 minutes for an ATR is the sweet spot.

We call ourselves an air transportation company because our focus is going to be ensuring that we take people safely and efficiently from point A to point B. We want to create an air transportation ecosystem, covering the tier 2 and tier 3 cities.

When would it be that you expect to see profitability?

Four years ago, we started a fundraising journey, and before we started operations, we ensured that we raised adequate capital, around 25 million dollars. So, we are well funded. We are possibly the only regional airline anywhere in the world that's raised this quantum of capital and we raised it to ensure that we are financially strong and can see this plan through.  We expect breakeven would happen from the second year of operation, that's the target.

There are two critical elements to understand — one is the kind of average yield that you can get because the load factor is never a problem in our country. The more important part is the unit cost in which you can operate as aviation is all about cost leadership. Keeping our cost structure very smart and low is critical and making sure that we're flying the routes where you can get the right yields is very important. If we get this right, profitability will follow. 

Looking 5 years down the lane, would we see the Fly91 network web out all over the subcontinent or stay more towards Goa and the western/South western parts?

The five-year plan is to induct a fleet of 39 aircraft and set up six bases across the country, with each base covering between 8-10 cities. At the end of the five-year mark, FLY91 will cover 50 cities through 6 bases and provide air connectivity to airports that are a 60-to-90-minute flight away. The airline’s long term strategy is to service six zones, including the Northeast region. Our present focus is on meeting the air travel needs of the six cities that we serve. 

By this point in time, do you think you would have one or more codeshares or agreements with other airlines in place? 

We have a slightly different approach. We have created open APIs into our system, which allows anybody to plug into my system and sell the inventory. So tomorrow, if any airline wants to plug in, they can do it. A bus company wants to plug in, they can do it. Anybody that sees value in my inventory can pick it up and sell the tickets. If any airline that flies into Mopa airport wants to pick my inventory and sell it as a connected flight, be my guest. All it needs is a one-page agreement. It is our technology that enables it. Any airline comes to me and within seven days flat, my inventory can show on any airline that wants to build and sell a product. There are conversations going on with some airlines in this regard. We are also in conversations with some non-airlines as well. We will make some announcements soon.

Of all the case studies you did with airlines that didn't make it in India, what was the most repetitive and damaging reason that you at FLY91 would want to avoid at all cost?

I spent about 25 years of my life across various facets of travel and aviation. I was part of the startup team for Emirates at Hyderabad and then I set up Bangalore, Cochin, managed Emirates in North India, Western India. And then of course, my interesting stint at Kingfisher. In fact, my Kingfisher stint was in two parts. The first part was when I set up the airline and post which, you know, after the Deccan merger, I decided to move on.

I worked at the American Express running a travel business for three years. And then I rejoined Kingfisher, trying to help fix the airline. So I’ve seen what it takes to build a great airline. And I’ve seen what it takes to also, you know, lose a good airline and the challenges associated with that and what can go wrong.

Aviation is an extremely precise business and you need to run it in a very precise fashion. It is all about cost leadership, financial structuring, taking care of the asset, which is your aircraft, and taking care of your engineering costs. We studied airlines that failed and we also studied an equal number of airlines that succeeded. 

Every failed airline looks at aviation only from the lens of hospitality and the service industry. And that is where, if you ask me, it is one of the fundamental issues. There are basics in aviation you need to follow. Your product is not what you serve on board. Your product is your network and your assets. So all I’m saying is that airlines should focus 80% of their energies on operations, the core. The remaining 20% can depend on what category of airline you have. 

We are focusing on doing all the right things that successful airlines have done, which is selecting one aircraft type, building a very clear financial structure, making sure that assets are brought in at the right price, and overall maintenance. 

Our growth plan is a very conservative, restricted growth plan. We're not trying to induct 15 and 20 aircraft a year, so there's no challenge in finding good machines and accessing them.

Tell me about your personal drive that fuelled you to get FLY91 airborne?

The seed of FLY 91 was sown almost a decade ago around the time when Kingfisher shut down. One of the things I noticed at the time was that we had built a very solid robust regional network which used to fly to tier II and tier III cities. These were profitable sectors we used to operate on with good aircraft utilisation and frugal cost of operations. When Kingfisher shut, these airports just went off the grid.

About the Interviewer

Siddharth is an aviator at heart, and most things during his day revolve around aviation, be it flying, writing, or just being an avgeek. Siddharth holds a European pilot's license, and he is currently Flight Instructing on a mixed fleet of aircraft, including the Cessna 150/172, Piper, Diamond 40, and most importantly, the Pipistrel Velis Electro, all on the same day. During the evenings, he brings out his paper and pen, which is when journalism starts. He writes for a couple of leading Aviation publications across the globe in English and other languages - mostly focused on airlines and airports in detail, including interviews with the CEOs. He is also certified by IATA as an Aviation Management Person. Siddharth is based in Germany.