Air India board to discuss international base plan

The first board meeting of Air India with four new independent directors inducted last month will discuss a proposal for a base in Europe for its flights to the United States. The meeting, to be held on Tuesday, will discuss the viability of the cities of Dublin in Ireland, Birmingham in the United Kingdom, Barcelona in Spain and Copenhagen in Denmark as a base for Air India flights from India to the US.

“The viability of the new destinations will be reviewed in the first board meeting with the new directors and only after that will any decision will be taken,” said a senior ministry official, who did not want to be identified.

Air India operates four daily flights from New Delhi and Mumbai to New York, Newark, Washington and Chicago.

Air India had earlier decided upon Frankfurt in Germany as an international hub but gave up the idea after it found the place to be too expensive to operate from.

“The cost per passenger at the Frankfurt terminal is at 10 per cent of the fare charged per passenger, which is high by every standard. This forced us to look for other cheaper destinations,” said a senior Air India official, who did not want to be identified.

The new 13-member Air India board has Mahindra & Mahindra Managing Director Anand Mahindra, Federation of Indian Chambers of Commerce and Industry General Secretary Amit Mitra, industrialist Harsh Neotia and Air Chief Marshal (Retd) Fali H Major as independent directors. They have joined the airline for a period of three years.

After the new terminal at the Delhi airport starts commercial operations, the merged entity will make Delhi its hub. Air India operates 12 international flights from Delhi and 17 from Mumbai, a large chunk of which is expected to shift to the capital now. Erstwhile Air India had its hub in Mumbai and erstwhile Indian Airlines’ hub was Delhi.

Air India is expected to see losses go up by another Rs 5,000 crore in 2010-11. It has been partly bailed out by the government, by pumping in Rs 800 crore of equity in the current financial year and another Rs 1,200 crore is expected during the next financial year.

The cash-strapped carrier already has over Rs 16,000 crore working capital borrowings on its balance sheet and borrowings have risen sharply from Rs 6,550 crore in November 2007 to Rs 15,241 crore in June 2009 — primarily on account of interest payments on acquisition of aircraft.