The Hindu Business Line : AI examining plan to wet lease Boeing aircraft

The move would offer customers the choice of flying an Indian carrier in either business or economy class when they travel to cities that are about five hours from India.

New Delhi , Aug 28

Air India is preparing to face competition headon from airlines in South-East Asia, the Far East and the Gulf.

With some of its leased aircraft due to be returned, the airline is examining the option of wet leasing six Boeing 737-800 aircraft from its low-cost subsidiary, AI Express, which is schedule to receive 10 brand new Boeing 737 aircraft next year. (A wet lease involves taking the aircraft along with the cockpit crew.)

The aircraft being leased would offer customers the choice of flying an Indian carrier in either business or economy class when they travel to cities that are about five hours from India.

This, in effect, means that AI would be able to offer non-stop flights from various India to destinations as far apart as Hong Kong and possibly China in the East and Dubai in the Gulf region. "The proposal would be a win-win for both airlines," a senior AI official said.

"The induction of the aircraft from AI Express would ensure that the parent does not have to look outside for acquiring aircraft and the subsidiary would get lease rental for an expensive asset that otherwise it might not be able to utilise."

The induction of the airline could see $1-1.25 million per aircraft per year flow into the coffers of the subsidiary airline as leasing charges.

AI is conducting a feasibility study to see whether the cost of reconfiguring the aircraft into a single class cabin before returning it to AI Express would be offset through the revenues that operating the flight would yield.

While AI Express operates its aircraft with a single class configuration, the AI aircraft have two or three class configuration.

A committee headed by AI's Director of Finance is also examining which in-flight entertainment (IFE) system should be installed if the Boeing 737 aircraft are leased.

"The aircraft will have a dropdown television. However, the committee is examining whether having some added IFE equipment is feasible," a senior official said.

The aircraft being leased by AI would not affect the operations of AI Express, sources said.