After almost a decade, Air-India has kicked off the process of buying new aircraft. The ministry of civil aviation asked A-I to submit an expansion plan within three months, after it received a letter from the Seattle-based aircraft manufacturer Boeing offering aircraft on reduced prices along with attractive self-financing schemes.
The national carrier which will be bouncing back into the black at the end of 2001-02 for the first time since 1994-95, has appointed an in-house committee to decide on the types of aircraft required for the expansion programme. A key strategy is to step up operations to the US.
The A-I fleet of 28 airliners is also ageing (average 15.3 years) and for safety reasons several airliners in use at present need to be urgently replaced. The financing schemes offered by the aircraft manufacturers are likely to be availed of by A-I. It will not seek government aid for the fleet-rationalisation programme.
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With the aircraft being deployed on the highly profitable Indo-US routes, debt servicing is unlikely to be a problem.
The US and the Australian markets are grossly under-served at present, with the United Airlines, Canada 3000 and Qantas pulling out.
The only link available to these markets is through the indirect A-I flights.
This is the reason why even in September-October 2001 the carrier recorded load factors of 68 per cent on the route, which was 18 per cent higher than the market average.
It may be noted here that 30 per cent of A-I's revenue comes from the US sector.
European carriers, including Air France and British Airways, have reported that 80 per cent of the traffic carried from India takes connecting flights to the US from Paris and London.
A-I could not undertake the expansion programme earlier because the government was in the process of divesting 40 per cent of its equity-holding in the the national carrier.
It was also recording losses year after year. With all the bidders in the fray for the stake pulling out, the government has now decided to defer the privatisation programme till the strengthened airline fetches a handsome price.
Top government officials and A-I executives confirmed to Business Standard that the airliner would buy new long-haul, medium and large capacity (Airbus-340s or Boeing 777s) aircraft for direct operations to the US and replace the short-haul aircraft for its services to Europe and the Gulf. Primarily, airliners are likely to be bought as the five aircraft dry-leased this year have proved to be of inferior quality.
Earlier, a fleet plan developed for the Ninth five-year-plan could not be implemented due to the government's inability to infuse funds requested by the airline, according to the A-I annual report for 1999-2000.
The proposal pertained to the induction of six small capacity long-range and six small capacity short-range aircraft and one B747-400 aircraft.