Another Airline To Join India’s Crowded Skies -- But This One Is Owned By The State

Another player is joining India’s ever-expanding airline industry -- but this one isn’t privately owned. Air Kerala is a new venture from the south Indian state of the same name and will begin operations in November, according to several reports. It will be the only Indian airline owned by the government.

India’s aviation industry is has been growing at a rapid clip. By 2034, the International Air Transport Association expects it to be among the top five domestic air travel markets in the world. Domestic air passenger traffic in the country is posting double-digit growth: In October of 2014, it grew by 16.3 percent, reports IATA.

Low-cost carriers -- of which Air Kerala will be one -- are rapidly entering the Indian market. There were two such launches in 2014 alone, Vistara and AirAsia India.

Air Kerala will fly domestically from Kerala’s Cochin International Airport for one year before a planned expansion to serve international destinations, mostly in Gulf Cooperation Council countries where millions of Keralites live and work. That hinges on Prime Minister Narendra Modi’s proposal to eliminate the "5/20" rule, a regulation that stipulates Indian airlines cannot fly internationally until they have completed five years of operations and own a fleet of at least 20 aircraft.

Whether Air Kerala will be able to keep pace in India’s fiercely competitive aviation market remains to be seen. Though it hasn’t operated a single flight yet, the airline already is posting a loss of $250,000 since it was set up by Kerala’s state government in 2006. As of now, the airline is owned by the Cochin International Airport, which has a 99.99 percent stake in the venture but will sell to private individuals and foreign airlines after it starts flying, expecting to retain only 26 percent of the company, reports Quartz.