Air India plans to add 25 aircraft for expansion to under served regions

NEW DELHI: Air India has prepared a plan to add 25 aircraft, the stateowned carrier's first fleet expansion since an order for 111 aircraft placed in 2006, as it seeks to expand network to underserved regions.

"These aircraft will be used to strengthen our network to smaller cities, which will be connected through an Airbus 320 aircraft and supplemented by another flight with an ATR aircraft," said a senior Air India official, who did not want to be identified. The official added that all the additional aircraft (15 Airbus 320s and 10 ATR 72s) will be leased and board approval for their induction will be taken soon.

Of the 2006 order for 111 planes - 43 Airbus and 68 Boeings - the airline has inducted 102, with nine Boeing aircraft still to be brought in.

Air India operates a fleet of 115 aircraft, according to its website, and recently inducted five new Airbus 320s to replace old planes. Subsidiary Alliance Air, which connects mainly tier-2 and tier-3 cities, operates eight ATRs and two CRJs and has plans to add three ATRs by next year.

"The 25 aircraft addition is over and above the planned fleet expansion. A large number of these 15 aircraft in our fleet will be in singleclass (all economy) configuration," said the official. The fleet expansion is needed to tap growth in the market and increase market share, the official said. Air India is the third-largest domestic carrier in the country with a 15.9% market share in September, according to government data.

The government announced a draft civil aviation policy last week that proposes a scheme to promote regional connectivity from April. Travel industry experts said Air India's plan to expand in the domestic sector was a timely move.

"A lot of business travellers from the small and medium enterprise sector will surely be looking to shift from other modes of transport to flights, if it is available at the right price point. This is the right time to move towards expanding into the smaller cities as the fares are low on the back of lower fuel prices," said Sharat Dhall, president at Yatra-.com, India's second-largest online travel portal.

While Air India expanded its network overseas in the past few years, focus is on strengthening the domestic sector. Air India chairman and managing director Ashwani Lohani wrote to all state governments offering Alliance Air aircraft to provide regional linkage.

The national carrier has accumulated losses of Rs 20,000 crore and is aiming to turn profitable by 2018-19. The airline is expected to post a consolidated net loss of Rs 5,400 crore by March 2016.

On an operational basis — which typically excludes interest, tax and depreciation — it is projected to become profitable by the end of this financial year.