With states' support, Air India plans regional push

To ensure airline does not suffer any cash loss on unviable routes, carrier seeks Viability Gap Funding from state govts

Air India is gearing up to execute the government’s regional connectivity push.

In keeping with the plan of connecting under-served routes, the state-run carrier is adding almost 50 routes. Most of these are new.

Some of the proposed direct connectivity routes are Delhi-Porbander, Mysuru-Goa, Delhi-Pantnagar, Lucknow-Dehradun and connectivity to the Andaman & Nicobar and Lakshadweep.

Chairman Ashwani Lohani on Wednesday met the representatives of 15 states. “I met with officials of state governments to find out potential routes. The representatives gave us many suggestions and we will finalise a plan in 10 days,” he said.

Lohani said the airline was trying to increase its domestic connectivity, especially in smaller towns, using smaller aircraft such as ATR-72 and ATR-42. “With our new fleet acquisition plan, we plan to connect unconnected cities. This also makes perfect business sense.”

The airline has asked for viability gap funding (VGF) from the state governments to ensure it does not have to face losses in case the routes turn out to be unviable. “Some routes like Mumbai-Nagpur will be profitable. So we don’t need any support. For the others, we have asked for viability funding. Many state governments like Chhattisgarh, Maharashtra and Gujarat have shown interest,” Lohani said. VGF can come in the form of a state government underwriting losses that the airline makes in the route.

The airline plans to have a fleet size of 43 aircraft by the end of 2018. “By March 2017, we will at least have 18 ATR-72s in our fleet,” the chairman said. The airline would simultaneously start working on crew recruitment and finalising other logistics for the proposed fleet expansion, he added.