Air India's fleet expansion on hold after NITI's privatisation proposal

According to MoS, a Cabinet note on its privatisation is likely to be prepared shortly

Air India's plans to expand its fleet with new aircraft seems to have hit an air pocket following the NITI Aayog's proposal to the Prime Minister's Office (PMO) its total privatisation which made the national carrier's future course uncertain.

Decisions earlier approved by the airline's board of directors regarding the acquisition of newer versions of aircraft are currently "on hold" and tenders for procurement of new planes have been deferred till there is a clarity, an airline source said.

Air India's board of directors had in March approved a proposal to induct seven Boeing 787-9 aircraft in its fleet with the aim to improve connectivity to Canada, the US and Australia.

The airline was planning to float tenders for procuring these aircraft on lease this month, which has now been deferred.

"The decision (of floating tenders) is on hold until there is a clarity on the airline's future," a top Air India official said.

Similarly, plans to procure 10 more ATR aircraft by Air India's regional arm, Alliance Air, which has been awarded several routes under the Centre's regional connectivity scheme UDAN (Ude Desh ka Aam Naagrik), have been put on the back-burner, the official said.

Alliance Air currently has 10 ATRs in its fleet and has recently placed orders for the leasing of 10 more such planes by the end of this fiscal.

As part of its fleet expansion plans, Alliance Air has proposed to take its ATR fleet strength to 30 over a period of time.

On the other hand, Air India is also leasing 22 Airbus A320 Neos, of which four have already joined the fleet.

According to the source, the airline had planned to issue bids for seven more such planes but now there is uncertainty over these tenders as well.

However, as of now, there is no change in plan to take the deliveries of the remaining four of the total 27 Dreamliners (Boeing 787-800s) that the airline had ordered in 2006, which are to be inducted in its fleet between July and October, the source said.

The state-owned carrier has a total 103 planes of which 42 are wide-bodied Boeing 777s, 747s, 787s and 61 narrow- bodied Airbus 319s, 320s and 321s. Its low-cost subsidiary Air India Express has 23 Boeing 737s.

Union Finance Minister Arun Jaitley has favoured privatisation of Air India and the civil aviation ministry is looking at all options to make the airline strong and viable.

According to Minister of State for Civil Aviation Jayant Sinha, a cabinet note in this regard is likely to be prepared shortly.

Air India has piled up over Rs 50,000 crore debt mainly because of high maintenance cost and lease rent.

It made an operational profit of Rs 105 crore in the financial year ending March 2016, the first time since the merger of then Air India and Indian Airlines into one entity Air India in 2007.