National carrier to transfer 14 A320s to subsidiary

Placed with stiff competition from private players in terms of market share, Air India plans to launch a low-cost service on domestic routes. The service, which would bring the government carrier in direct competition with the fast growing LCCs (low-cost-carriers) such as IndiGo and SpiceJet, will be operated under the Alliance Air brand, sources said.

Over 67 per cent capacity in the domestic market is in the low-cost bracket, according to Boeing's market outlook for 2011. Although the combined market share of low-cost carriers such as IndiGo, SpiceJet and GoAir is about 40 per cent, Jet Airways operates 60-75 per cent of its capacity for no frills service. Air India is the only carrier not to have a low-cost service on domestic network. AI had 14.9 per cent market share while market leader Jet Airways has over 25 per cent.

Air India board, on Wednesday, gave its approval to transfer 14 Airbus A320s of Air India to its subsidiary Alliance Air. The management is still to finalise a detailed business plan regarding its low cost model, it is learnt.

"It's an in-principle approval,'' a board member said referring to the plans for low-cost service. Air India CMD Arvind Jadhav, however, confirmed that approval had been received. The airline's spokesperson did not respond to an email query.

The Airbus A320s, which are 15-20-years-old, belongs to the erstwhile Indian Airlines and do not have an inflight entertainment system. Their maintenance costs too are higher, too.

Air India will have to depute its own pilots to Alliance Air to fly the Airbus A320 and as per estimates would require, at least, 70 sets of commanders and co-pilots.

"Pilots may be willing to join Alliance Air on deputation if they get a good incentive or increment,'' a senior commander said.