Ia Likely To Drop Plan To Acquire 50-Seater Aircraft

Indian Airlines has put its plans for acquisition of six 50-seater aircraft indefinitely on hold.

According to sources, an internal committee of the airline, which has recently conducted a study on such aircraft, has chosen ATR over other planes, including Dash-8. Saab 2000 had dropped out of the race after its world-wide production of the aircraft was closed down.

Sources said the proposal is likely to be dropped altogether in view of the governments plans to promote regional airlines. They said there had been a sea change in thinking in this regard in both the airline and the ministry.

IA had earlier decided to make an outright purchase of all the six 50-seater aircraft, instead of taking them on dry lease or on hire-purchase terms.

 

Earlier, an IAs evaluation committee had indicated that acquisition of 50-seater aircraft for short-haul operations would be uneconomical under the current fare structure.

It had been suggested that IA should either increase the fares or take the aircraft on dry lease to reduce the break-even cost to a manageable level.

The committee had concluded the aircraft would break-even only at around 117 per cent 123 per cent seat capacity.

The airline had initially planned to buy six 50-seater aircraft and expand the fleet to 8 in 1998-1999, 10 in 1999-2000, 13 in 2000-2001, 16 in 2001-2002 and 19 in 2002-2003.

The committee set up by the finance ministry had also said that IA needs to withdraw completely from operations in the Northeast and make the region a contestable market by offering it to all operators.

It has suggested the government should invite competitive bids from existing or potential operators for an exclusive franchise (for three years) for operating air services in the region and give the contract the operator seeking the least subsidy.

Sources pointed out the thrust of the new policy (which is still in draft stage) is to promote regional airlines. It is proposed that operations in the backward region may be voluntarily taken up by scheduled or regional operators. There will be no compulsion for scheduled operators to fly on uneconomical routes.

This will be a major relief for Indian Airlines and other scheduled operators, since losses are incurred on these sectors.

Losses by Indian Airlines due to operations in the Northeast were Rs 48 crore in 1995-96 and will be of the same order in 1996-97. These operations are expected to be carried out by regional airlines, which are to be given a thrust in the new policy.