How long will Air Kerala remain as ‘paper company’?

KOCHI: Come September, Air Kerala International Services Ltd (Air Kerala) will have most likely held its 13th annual general meeting (AGM), though the company is still not operational.

When will Air Kerala take off or will it ever be airborne is a million-dollar question. The explanation of the company on why Air Kerala has not yet commenced operations sounds interesting or rather confusing as the company is nowhere near placing order for a single aircraft yet.

Air Kerala says that the airline can commence international operations if the company deploys either 20 aircraft or 20 per cent of total capacity, whichever is higher, for domestic operations.

“Even though, the Government of Kerala had earmarked Rs10 crore in the previous State Budget (2017-18) to commence commercial operations, the company could not initiate actions due to the existing restrictive clause of ‘deployment of 20 aircraft’ for commencing the international operations,” the company document said further.

It’s not yet known how the company plans to overcome this restrictive clause without buying aircraft or starting operations. Businessbenchmark.news also had tried to decipher the theory behind keeping the company for 13 years on paper and doing nothing, but was to no avail.

Air Kerala was established as a wholly owned subsidiary of Cochin International Airport Ltd (CIAL) about 13 years ago, in 2006, with the explicit aim of operating international flights and thereby help NRIs fly overseas, especially to the Gulf countries, at affordable prices.

But unfortunately, the alternate governments that served Kerala at five-year intervals didn’t bother to take the project forward for reasons privy to them.

However, other than flying, all other corporate functions such as holding annual general meetings (AGMs), doing audits, convening board meetings, etc are religiously being followed for well over a decade now.

“Even airlines operating on commercial terms today struggle to stay financially afloat, let alone the airlines established with the sole intention of flying the hapless NRIs at low rates. I am sure if CIAL begins operations of Air Kerala, the airline will certainly accumulate losses, pulling the CIAL share prices also down (CIAL is not listed, and hence shares are not traded on official markets),” an airline expert noted.

As the AGMs and board meetings of Air Kerala take place with unfailing regularity, the people of Kerala keep surprising why this drama should take place as a ritual every year and why not the government take steps to wind it up, if the project is not feasible.

The directors’ report of Air Kerala last year has explained that the primary objective of Air Kerala was to establish a low cost airline based at Cochin International Airport to benefit the huge population of Non Resident Keralites in the Middle East.

In the National Civil Aviation Policy (NCAP) issued by Ministry of Civil Aviation (MoCA) on June 15, 2016, the requirement of 5/20 (5 years’ standing in the market and 20 aircraft in operation) has been partially modified.

This means that currently the requirement that mandated the airlines to have five years of domestic operations to be eligible to fly overseas has been scrapped.

 

 

 

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