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Rs 100-billion A-I fleet plan to be okayed

Rumi Dutta

The civil aviation ministry is set to approve the purchase of 45 new aircraft for Air-India, at an investment of around Rs 100 billion. It will be the carrier's first fleet expansion in a decade, and will more than double its existing fleet of 28 aircraft.

Only last month, the Centre gave a nod to Indian Airlines to buy 43 aircraft from Airbus in a deal worth over $2 billion.

The government now proposes to make Air-India utilise its unused bilaterals and fly to 20 new countries with the expanded fleet. The Centre currently has bilaterals for 96 countries but operates 47.

Confirming the development, minister of civil aviation Shahnawaz Hussain, told Business Standard: "Air-India will be reporting a profit after seven years. Today, our focus is more on investment than on divestment. Under Air-India's aircraft buying plans, for which an acquisition committee was set up, 45 new aircraft will be purchased at an investment of around Rs 100 billion."

He, however, did not comment on the mode of financing the proposed fleet expansion. Air-India and Indian Airlines will now collectively need over $4 billion for their expansion, while their divestment has effectively been put on the backburner.

"Air-India will soon be flying to Frankfurt. The new aircraft will be deployed towards utilising the unused bilaterals," Hussain added.

Currently, Air-India does not fly to some lucrative destinations like Australia, Italy, Switzerland, and Germany. "We will be utilising our bilaterals with these countries after the fleet expansion," Air-India officials said.

Moreover, with some airlines pulling out, the European and the Australian markets are grossly under-serviced ," Air-India officials said.

As per its proposal to the government, Air-India is looking at a mix of long-haul, medium and large capacity aircraft. However, the acquisition committee is yet to decide on the type of aircraft to be inducted.

Air-India's present fleet of 28 aircraft has an average age of 15 years. The fleet comprises 13 A310s, three A300s, six Boeing 747-400s, two Boeing 747-300s and four Boeing 747-200s.

Though no details of the proposed funding of the deal were available, sources said aircraft manufacturers were offering several attractive schemes for financing as well as offering heavy discounts.

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