25 June 2009

Air India likely to become low-cost carrier

NEW DELHI: Air India has been told that it will have to give up its full-service carrier status and transform into a commoner ââ¬' low-fare airline ââ¬' on most domestic routes to survive.

The Times of India reports that prime minister Manmohan Singh yesterday spent 90 minutes with aviation ministry honchos on the cash-strapped airline's woes and its demands for a bailout from the government.

While he is believed to have promised support to the national carrier, it was made abundantly clear that any bailout will come if ââ¬' and only if ââ¬' Air India is able to shed its flab, become competitive and completely transform itself.

Otherwise, it's curtains for the airline, said The Times of India
After meeting the PM, aviation minister Praful Patel said, ââ¬ÅâœUnless a series of measures are taken to improve the airline, it will not be possible for the government to keep supporting it unconditionally. This is one last chance Air India has got," Patel said.

This "radical restructuring" could mean Air India transforming into a low fare airline on almost all domestic routes except a few niche metro sectors where full service airlines get some business.

"Indian carriers will have to redefine their business models. If someone has a capacity that can't be supported by a full service model, what choice does he have?" Patel said.

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