The Hindu Business Line : IA to extend local reach; Plans tie-up with Air Deccan

IN a significant step, Indian Airlines plans to tie up with a domestic private airline to service regional routes through a hub-and-spoke arrangement.

The move could push back Indian Airlines' plans to buy small capacity aircraft such as ATRs to service its feeder routes, for which the airline had set up an experts' committee for shortlisting the manufacturer a few years ago.

A top IA official told Business Line that the airline is in talks with Air Deccan, to use its services as a feeder airline. Air Deccan is a low-cost, no-frills airline. The official said under the hub-and-spoke arrangement, passengers using Air Deccan's flights need not book tickets separately for their onward journey. A single ticket will ensure that they can travel by an IA flight to any of the destination covered by the airline. The official said the tie-up with a regional airline such as Air Deccan, will lead to optimising the capacity utilisation of the airline.

Currently, IA's subsidiary, Alliance Air, operates small-bodied ATRs to service the north-eastern sector.

Air Deccan has bought on lease six 48-seater ATR-42s on dry lease and two of these have already been inducted while the rest would be inducted by November.

The experts' committee set up by IA had suggested that the airline should buy 50-seater ATR42-500s to service its feeder routes though the operation of such a service was found unviable.

An Air Deccan official said a meeting with Indian Airlines officials was held today to discuss the details of forming the alliance. One of the options before the two airlines is to have a revenue-sharing arrangement. But Air Deccan officials will have to sort out the issue of ticketing as the airline has opted out of the common computerised reservation system to peg its costs down. Each ticket routed through the computer reservation system entails a charge of $6.

Air Deccan offers low fares, which are around 50 per cent cheaper than those charged by others. It has cut costs through various measures such as doing away with physical delivery of tickets and serving of snacks on board.

The company hopes to keep its marketing and booking costs low as it expects most of the bookings through the Net. It is also keeping its wage cost low employing a minimum number of people. It also wants to save by way of keeping its aircraft in flight for more number of hours.

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