The Hindu Business Line : Indian Airlines firming up plans for Alliance Air

THE future of Alliance Air, the 100 per cent subsidiary of Indian Airlines, will be firmed up soon. The newly appointed Chairman and Managing Director of Indian Airlines, Dr Vishwapati Trivedi, told Business Line that the airline was working on a "base paper" on the future of Alliance Air.

"The paper will be ready within a month. It will be sent to the Government before a final decision is taken on Alliance Air," Dr Trivedi said.

The options being considered include fully rejuvenating the airline, running it as an operator on small routes or developing it into a low-cost no-frill airline. While closing down the airline could be one of the options, Indian Airlines was not too keen on this, he added.

Indian Airlines set up a wholly owned public limited company, Airline Allied Services Ltd (AASL) in 1983 with the objective of providing support services to the core activities of the airline.

However, in 1988 the Memorandum and Articles of Association of AASL was amended to include the mandate of establishing, maintaining and operating international and domestic air transport services.

AASL started airline operations with Boeing 737 aircraft under the brand name Alliance Air in April 1996.

The fortunes of the subsidiary airline has been declining in the past few years and the airline reported a provisional loss of Rs 34.43 crore during April-November 2004, as against a loss of Rs 29.14 crore reported during the same period in the previous year.

At present, Alliance Air mainly operates the smaller ATR 42 aircraft that are used for services mostly in the North-East.

Senior airline officials said that the contractual model of employment being followed by Alliance Air was good and should be kept as it offered greater flexibility in a competitive market.

While the option of employing more pilots in the future to operate the ATR aircraft could be explored, sources indicated that Alliance Air would have to do with leased aircraft.