Reminiscent of Indian Airlines, AI subsidiary to take fleet to 40 planes to turn a major player on domestic sector; parent to focus on long routes
In what could be seen as revival of Indian Airlines era, the Air India management is mulling giving enough gun powder to its subsidiary company Alliance Air to help it take on market leader IndiGo and others in the domestic market.
Air India, on the other hand, would concentrate on metro, long and ultra-long haul routes.
"We want to make Alliance Air take on IndiGo and other competitors as we believe it has the potential. We should be able to take on the competition within three years when we have a fleet of around 40 aircraft," revealed an AI management source to DNA Money.
As per the plan, the total fleet of Alliance Air will be raised to 40 within the next three years. At present, Alliance Air operates services to 36 destinations in India with a fleet of eight ATR 72-600 (70-seater) and two ATR 42-320 (48seater) aircraft. On Monday, the company announced taking 10 ATR 72-600 on a long lease from Dubai Aerospace Enterprise Ltd.
At present, flight schedules of Alliance Air are structured in a manner which enables easy connections to/from smaller cities via the hubs of Delhi, Kolkata, Mumbai, Bengaluru and Hyderabad. Alliance Air provides connections to international stations through its hubs.
The possible reason for going back to the 'old ways' has been a strong feeling amongst certain segment in the airline management including present CMD Ashwani Lohani, who believe that the merger was a wrong move which acted as the biggest reason for the airline company's fall. "The biggest reason for the downfall of this airline was the merger between erstwhile Air India and Indian Airlines, which was done despite the fact that both carriers are totally opposite of each other," Lohani had earlier said in an interview to a financial newspaper.
According to a report released by consultancy firm CAPA as part of its aviation growth outlook for this fiscal, IndiGo's share of traffic has crossed 40% and could approach 55-60% within the next two years. Out of the fleet size of around 160, the airline operates around 140-145 aircraft on domestic routes.
In a written reply to Rajya Sabha, Union Minister of State for Civil Aviation Jayant Sinha last month said that Air India is projected to post an operating profit of Rs 300 crore in the current fiscal and there was no plan to privatise the airline. He said the carrier's net losses are also reducing gradually on account of the overall improvements in the "operational and financial performance".
Last fiscal Air India had an operating profit of Rs 105 crore. The national carrier, which has debt in excess of Rs 46,000 crore, is surviving on fund infusion by the government. The Turnaround Plan (TAP) provides for equity infusion over Rs 30,000 crore in the airline up to 2021 subject to achieving certain milestones.
FLYING IN FORMATION
- The total fleet of Alliance Air will be raised to 40 in three years
- Air India would concentrate on long and ultra-long haul routes
- Alliance Air operates services to 36 destinations in India now
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