Air India defers expansion plans

New Delhi: Taking its lead from the largest private sector airline Jet Airways, flag carrier Air India too has puilled back from fully implementing its planned expansion programme. 

Currently combating huge losses, the National Aviation Company of India Ltd (NACIL) will instead focus on the resolution of its post merger issues and improving the airline's bottom line before plans to expand its flight schedule are implemented. 

NACIL chairman and managing director Raghu Menon told the media that during the annual budgeting exercise for the 2008-09 financial year, NACIL had estimated its fuel bill at around Rs6,500 crore. However, the past five fuel hikes from between April and August 2008 have added Rs1,500 crore for these five months, which being a ''stupendous amount'', the budget has no room for.

Accordingly, the airline has now asked the government of India for an equity investment of Rs1,300 crore, so that the gap between the airline's paid-up capital of Rs145 crore and its authorised capital of Rs1,500 crore narrows down. 

Menon told the media that the government can also raise the threshold of the authorised capital, and that NACIL was currently working on a proposal for soft loans that would be sent to the government soon. Air India needs to fund aircraft acquisition worth Rs40,000 crore in the near future.