Air India squeezes domestic airlines; gets green signal to expand fleet

Our Corporate Bureau
08 July 1999

Less than a fortnight ago, the huge hoarding hugging the Air India corporate headquarters at Nariman Point in south Mumbai advertised its congratulations to its million-mile flight winner, JK Bedi, a businessman. The gentleman, who is part of AI's frequent flyer programme, gets two free tickets to Singapore.

Business as usual? Sure, all part of the highly competitive war for the skies. As a part of which the AI board cleared a fleet expansion plan as June rolled over to July. The clearance was given on AI's technical committee recommendations submitted earlier. The way is now clear for the airline to order 12 aircraft--six Small Capacity Long Range (SCLR) ones, and six Small Capacity Short Range (SCSR) aircraft.

Last month, aircraft makers Airbus Industrie and Boeing, and engine makers Pratt and Whitney, General Electric, International Aero Engines, Rolls Royce and CFM had made presentations to the technical committee. The board clearance means detailed discussions on this can now happen.

While it's early yet to talk of route expansion (AI had cut down on routes earlier this year), the whisper is that Airbus A330 and Boeing 767 are being considered in the SCLR category, and A320 and Boeing 737 are the favourites in the SCSR category.

Meanwhile, in the domestic sector, the biggest competition on fares is surprisingly coming from Air India. The airline has nothing to lose and money to gain. Since it does hop flights before embarking to final destinations abroad, filling up empty seats on lower fares and only gain it some extra earnings. For instance, on the Mumbai-Delhi route, the domestic fight is for between 3,000 and 3,500 passengers daily. Sahara Airline's one-way fare, at Rs 3,800, is the lowest among the domestic airlines. But AI's fares, at Rs 3,045 one way between 8.00 a.m. and 10.00 p.m. and Rs 2,655 between 10.00 p.m. and 8.00 a.m., are far more attractive.

The only thing passengers have to do is go out a little further in the city to the international airports. That may mean slightly higher cost on travelling out that many kms extra. And to the airline, the only extra cost is the meals for domestic passengers. In fact, with AI lowering fares to such an extent, AC-class passengers might well feel tempted to forget about trains and fly for a marginally extra payment. Just look at the time it saves, after all!