Air India plans to generate higher revenues with states' help

Air India has for the first time approached states directly with an offer to provide connectivity to the regions with smaller aircraft availability by its subsidiary, Alliance Air, to fetch higher revenues.

Air India CMD Ashwini Lohani has written to all the state governments offering Alliance Air aircraft for providing regional connectivity under the viability gap funding model.

With these businesses, Air India, which has accumulated losses of Rs. 20,000 crore, is aiming to turn profitable on YOY basis by 2018-19. The airline is expected to post a consolidated net loss of Rs. 5,400 crore by the end of March 2016.

As many as eight states, including Gujarat, Madhya Pradesh, Rajasthan and Uttar Pradesh, have shown interest in the airline's proposal.

Alliance Air currently has a fleet of 10 aircraft, including 7 ATRs and 3 CRJs. These fleets are used to connect areas in the north eastern part of the country and also destinations in the hilly states of Uttarakhand and Himachal Pradesh.

While the airline management is hopeful of a surge in revenues through this scheme, former Air India employees say that dealing directly with states has its own risk.