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| AI to convert Alliance Air into cargo airline |
| Mihir Mishra / New Delhi Jan 14, 2010, 00:53 IST |
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Earlier, the plan was to rebrand Alliance into a regional airline.
 Alliance Air, a wholly-owned subsidiary of Air India (AI), will be converted into a cargo airline. Earlier, there were plans to rebrand Alliance Air as a regional airline under AI, flying to smaller cities.
The assets of Alliance Air are expected to be transferred to the newly formed company, Air Alliance Services, a subsidiary of AI and one of its strategic business units.
The move comes after Civil Aviation Minister Praful Patel, in a review meeting last week, directed the board of the airline to prepare a plan in this regard. National Aviation Company Ltd (Nacil), which runs AI, has been asked to come up with a strategy to convert Alliance Air into a cargo airline by the end of February, said a source in the ministry.
Alliance Air flies to 25 domestic destinations and has a fleet of 15 planes, comprising ATR-320 and Bombardier CRJ-700 ER craft. The airline basically operates on short-haul routes in the northeastern region. All these aircraft will be converted into freighters.
Recently, its ageing Boeing 737-200 fleet was converted to freighters and given to AI’s cargo division, which is based in Mumbai. The division operates a fleet of 10 freighter services to 12 domestic and two international cities. Even this division will get merged into the new company, Air Alliance Services.
The 15 planes with Alliance Air come with an employee strength of 768, of which 729 are on contract and the rest on deputation. It incurred operating losses of Rs 56 crore in 2007-08.
World air cargo growth will expand at a 5.8 per cent annual rate over the next two decades, with worldwide air freight traffic tripling through 2027, according to Boeing’s World Air Cargo Forecast 2008-09.
The civil aviation ministry has also directed AI to increase the utilisation of the Airbus 320 aircraft. The daily utilisation of the Airbus aircraft by other airlines is 12 hours, but AI’s is only 8.5 to 8.7 hours in a day. About 70 of AI’s 100 aircraft are from the Airbus 320 family.
Among other things, it was decided that Air India Express will operate as a different entity. AI is also setting up two new companies. Air India Engineering Services Ltd will provide engineering services and there will be a ground handling wing called Air India-Singapore Airport Transport services, an alliance between Air India and SATS.
AI is working on cutting costs and increasing the revenue. It has losses of over Rs 7,000 crore and it has got Rs 800 crore from the government to keep it going till March.
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