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BW Businessworld

Going Down Memory Lane

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Recently, I heard rumours that Chennai-based Paramount Airways (which had stopped flying not very long ago) is planning to relaunch its operations, this time with five ATR aircraft.

The airline, which was until recently locked in a legal battle with its lessors (who had repossessed their planes after a protracted court battle), is apparently trying to make a comeback. But there has been no end to speculation on one subject: Whose money is behind this airline? No one seems to believe that it is M. Thiagarajan's, the airline's managing director.

For the past few days, there has been an increasing amount of talk about a certain Volk Air, which is based in Bangalore. Its website describes it as the world's "first green vegetarian airline" with a fleet of 12 A320-200s. But neither Airbus nor any of the leasing companies are known to have struck such a deal in the recent past. So where is Volk Air going to get the aircraft from? The airline, whose website carries an unnamed chairman's message, is rumoured to be funded by a prominent Tamil Nadu politician, apparently to spite the Marans of SpiceJet. It claims to promote vegetarianism (what is it with Indian carriers and vegetarianism? Remember MDLR — India's first vegetarian airline?) and that it connects 15 destinations.

Add to this list of mystery airlines the name of Sky Hopper. The said airline was registered in July 2011 with a Gurgaon address and has a website that says the airline will offer "unmatched services on ground and in air" on aircraft that will use fly by wire technology. It does not say which aircraft though. Nowhere does the site reveal the identity of the owner of the venture.

Aviation in India has had a chequered past. Ever since the private sector started taking interest way back in the 1990s, several players have launched airlines, burnt their fingers and shut shop. More often than not, it was not clear why the airline was launched at all, whether there was ever a seriousness of purpose and with whose money.

In the 1990s, Parvez and Vispi Damania, two Mumbai-based brothers who owned and ran a broiler processing company, launched Damania Airways, which actually did quite well for almost four years before being taken over by the Khemkas, a rice exporter family from Chennai that planned to set up 4,000 wind turbines across India but never did. The renamed Skyline NEPC Airlines flew for a while but subsequently wound up in 1997 when it failed to make payments and was suspended by the International Air Transport Association (IATA).

Many will recall East West Airlines, which started in 1992 but had a rather dramatic end after its managing director Thakiyudeen Wahid was shot dead in 1995 near his office in Mumbai. A year later, the airline wound up. Then there was ModiLuft — a venture set up by S.K Modi, who owned and ran Modi Spinning and Threads. It operated from 1993-96 and subsequently metamorphosed into SpiceJet.

Besides, there were a few airlines that had very brief histories. Indus Airways, owned and promoted by liquor baron Kapil Mohan of Mohan Meakins, was registered in 2004, started in 2006 and was gone by 2007. Gurgaon-based MDLR Airlines, which was set up in 2007, was promoted by Sirsa-based  businessman Gopal Goel, who was rumoured to be close to a former Haryana chief minister. MDLR's offices across India were raided by income tax officials and the airline closed down in 2009.

Why am I listing all these airlines? To make a few points. One, the Directorate General of Civil Aviation (DGCA) needs to be far more vigilant about who it grants licenses to and for what. A thorough background check of not only the airline's promoters but also the funds will go a long way in ensuring that those with suspect antecedents do not foray into a sector where public lives are in their hands.

Two, someone needs to examine the close links between airline promoters and politicians. Even India's biggest private airline, Jet Airways, has long been connected with some of Maharashtra's political leaders. The exact nature of the link between them and Naresh Goyal though is not clear. The larger point is that industry circles claim that a lot of political money is "cleaned up" using this route.

I am inclined to believe that there must be some reason, not apparent to the rest of us, as to why everyone is rushing into a sector where no one has made any money consistently? Why would others want to join this unhappy bandwagon? Clearly there is more to this than meets the eye.


(This story was published in Businessworld Issue Dated 06-08-2012)