AI to focus on domestic routes

New Delhi: This could well be the ultimate irony of the controversial Air India-Indian Airlines merger that saw the domestic arm's identity getting lost. Now, the IA model — with a focus firmly on domestic and nearby international routes — is being seen as the only way for keeping the debt-ridden airline afloat.
The merged entity — National Aviation Company of India Ltd (NACIL) — has discussed with Boeing the possibility of converting remaining long-haul and twin-aisle Boeing-777s into 737s that can be used on IA routes. "AI's long-haul routes will not help reviving the airline because of their losses. For survival, we have to look at IA kind of model. NACIL is joining Star Alliance and international routes can be served by alliance partners, with AI operating on some less loss-making or profitable routes,” said a source.
A Boeing official said AI had ordered 23 B-777s, as part of the purchase plan. Of which 17 B-777s have been already given and three more will be sent this year. "AI has talked about deferring deliveries or substituting the remaining three B-777s into other smaller aircraft. The airline is yet to get back with a final word," said sources.
The previous revival plans of NACIL have been rejected by the Group of Ministers (GoM) and now the management has to work out a fresh proposal at the earliest. AI needs almost Rs 3,000 crore for paying interests on loans annually. "In the last GoM, airline showed its accumulated losses could be to the tune of Rs 20,000 crore by 2013. Annual interest on working capital loan is Rs 2,000 crore and Rs 660 crore is the interest on aircraft loans. So, interest amount alone is Rs 2,660 crore annually. As of now, there's no light at the end of this tunnel," said a senior official.
08/02/10 Saurabh Sinha/Times of India

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Categories: Air India Domestic Feb 2010, NACIL Feb 2010