Ajay Singh looking to do a SpiceJet with MDLR

After exiting the board of low-cost airline SpiceJet last year, Ajay Singh has initiated the process of investing in another carrier — the beleaguered MDLR Airlines — hoping to breathe new life into it.

New Delhi-based MDLR, a regional carrier, stopped operations in November 2009 after defaulting on lease payments to BAe for its Avro RJ70 aircraft.

According to a source in the know, Singh, who had promoted SpiceJet along with London-based NRI Bhupendra Kansagra, has sought the Ministry of Civil Aviation’s permission to pick up close to 23% stake in MDLR.

“He (Singh) has applied to the Ministry of Civil Aviation to buy stake in MDLR Airlines to revive its operations. The application is being processed and the ministry has sought clarifications on the source of the fund,” said the source.

The source, who spoke on condition of anonymity, did not disclose the price at which Singh was buying the stake.

MDLR, which began operations in March 2007, was founded by Gopal Goyal Kanda, a politician from Haryana, and is wholly owned by Murli Dhar Lakh Ram (MDLR) Group.

The company’s schedule airline operating permit has become defunct as all the aircraft in its fleet have been deregistered by the Directorate General of Civil Aviation (DGCA) for over a year now. However, its airline operating permit is still valid.

Singh could not be reached on the phone for a response and a text message sent to him remained unanswered.

A senior executive with another airline, who did not want to be named, said even if Singh succeeds in acquiring stake in MDLR, he will have to start operations from scratch.

“He will have to get brand new aircraft, set up new engineering and maintenance facility and start all over again. It will be like setting up a new airline, except for applying for the airline operating permit,” he said.

Despite stepping down from the SpiceJet board in August last year, Singh continues to hold around 5% stake in the budget airline even after media baron Kalanithi Maran bought over a majority stake of 37.7% in Spicejet.   

Singh, along with the Kansagra family, had re-launched the bankrupt Modiluft Airlines in 2005 after taking it over from industrialist SK Modi, who operated the airline in partnership with Lufthansa in mid-90s.

SpiceJet fought a long legal battle with Modi to settle a dispute over 11.5 million shares of the airline, which the Modiluft promoter claimed were still owned by him.

Modiluft was reincarnated as SpiceJet, and is today the second-largest budget airline after IndiGo, with a market share of 12.9%.