Religare Group’s Air Mantra Shows Potential in Time of Gloom

This is a guest post by Kabir Taneja, who has kindly agreed to write while I’m out of station.

Image: Wall Street Journal

Religare Group has recently launched its airline, Air Mantra. The regional carrier commenced operations on July 23rd, with its maiden service between Chandigarh and Amritsar using 17-seater Beechcraft aircraft.

Religare’s foray into the civil aviation market came as a surprise to some, with many questioning the timing, specifically when most airlines in India have struggled to post profits in the recent past.

However, Air Mantra’s regional flight planning has the capacity to become an industry example for future regional airlines, especially as recent civil aviation history in India is littered with failed regional carriers.

As many Indian and international media outlets showed surprise over the decision of Religare to launch an airline in the current financial environment, they seemed to have missed out on some vital aspects on why this is not the worst time to do so.

The basic mistake one can do is compare Air Mantra to the likes of MDLR, Jagson or even Paramount. Jagson and MDLR were airlines with non-existent management, questionable financial backing and layered with political connections and fallouts. Paramount was simply a case of mismanagement coupled with a wishful business model.

Religare has strong financing and deep enough pockets to wade through the initial investments phase. Over that, the airline has chosen a very interesting inaugural sector to launch its services. Punjab offers an eclectic mix of customers from a big segment of wealthy Punjabis to perhaps an even bigger segment of NRI Punjabis that visit the state multiple times in a year.

The regional air travel market is where the exponential growth lies for the Indian civil aviation sector. Loads on IInd and IIIrd tier destinations such as Raipur, Dehradun, Bhopal and so on have seen good growth and this has been recognised by Indian carriers with the likes of SpiceJet now operating regional aircraft such as the Q400.

But the growth of regional airline industry in India cannot be purely supported on the deep pockets and business models of airline operators. State and Central governments together need to provide infrastructure coupled with competitive cost structures to not only attract regional airlines, but to convince them to set up hubs connecting only other regional destinations.

Religare CEO and MD Sanjay Godhwani in a statement pointed out at the lack of regional connectivity in India and said that is where Mantra would like to concentrate, but promising as the targeted market may be, volatility in the airline business is always high with many factors such as price of ATF depending on international geo-politics and governments treating the sector as a cash cow via taxation both on companies involved and passengers.

The success of Air Mantra is dependent on professionalism, management and protection from economic elements which Religare is capable of. However big companies’ moving away from metro operations is a good and challenging trend, one that should be supported via all means necessary by all concerned establishments.