Indian Airlines (IA) has decided to take on lease 10 new aircraft, which includes six Airbus A320s and four ATRs. IA sources said with the government putting its fleet expansion on hold, it had become necessary to take on newer planes on lease to phase out older ones.
Sources said four A320s will replace an equal number of Airbus A300s which are expected to be phased out by March, 2003, while two more will be added to the existing fleet. Of the 10 aircraft, which will be taken on lease, four of these will be deployed by December and the rest by March 2003. ATRs, which are for short-haul service, will fly on the north-eastern sector. These aircraft will be taken on a five-year lease. All the six A320s will cost the airline $1 million a month, while the four ATRs will cost the airline a total of $95,000 a month.
Currently, IA has 36 A320s, five A300s and 11 Boeing 737s whose average age is around 10 years. This is the second time the government has put a major decision regarding the airline on hold. In January, 2000, the government decided to privatise the airline by offloading 51 per cent of its equity, of which 26 per cent will be to a strategic partner and the rest of the 25 per cent to financial institutions, employees and the public. But even this proposal has been put in cold storage.
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Early this year, Indian Airlines announced that it has decided to buy 43 Airbus planes to update its ageing fleet. The $2 billion deal involves purchase of a mix of A319s, A320s and A321s of medium range of aircraft to be delivered over four years between 2004 and 2008.
The airline needs to buy newer planes to phase out its ageing fleet to fight off a growing challenge from rival Jet Airways and Air Sahara who recently unleashed a major fare war. The private domestic airlines last month cut fares of major sectors by over 60 per cent which was followed by Indian Airlines. Airlines hope the price war will boost sales which have been sluggish for years. Both Jet and Indian Airlines have a 80 per cent share of the market.