NEW DELHI: State-run Air India has firmed up orders for 10 ATR-72, a twin engine turboprop 72-seater plane and has issued a `Letter of Intent’ (LoI, a declaration of the intentions) to the Toulouse- (France) based French-Italian aircraft manufacturer, ATR, as it gears up for the regional connectivity scheme (RCS), launched on October 20.
Air India CMD Ashwani Lohani told The New Indian Express that besides LoI for ATRs, the airline will soon close the deal with the state-owned aircraft manufacturer, Hindustan Aeronautics Limited (HAL) for 10 Dorniers, a-19-seater aircraft.
“We plan to work it out early next year. We are working on it. We have identified few destinations from where we intend to start with the RCS project,” said Lohani.
Alliance Air - the regional arm of Air India and a wholly-owned subsidiary of Air India -- will fly these planes to smaller towns under the government's RCS project.
The airline plans to fund delivery of these small planes through a mix of special grant and additional budgetary allocations by the central government.
Initially, Air India plans to start flights on RCS routes between 10 to 12 destinations, of which six would be from the five southernly states namely Telangana, A.P. Tamil Nadu, Kerala and Karnataka, said another Air India official on the condition of anonymity.
India’s aviation sector is expected to touch 100 million domestic and international passengers soon and is currently hovering close to 99.6 million. Of these the five southernly states share close to 26% of the traffic.
The government expects the first flight under RCS to take off in early January 2017.
The state-owned airline has been delegated to execute and kick-start RCS, a pet project of the Narendra Modi government to connect unserved and under-served airports in the country.
No private carrier has yet come forward to fly to RCS -based destinations which are unserved and unserved airports. This is despite a slew of incentives offered to airlines under RCS.
A senior civil aviation ministry said Air India would operate small ATRs and Dorniers on some of the RCS routes initially and that would create a demand for air travel on these underserved and unserved air routes. The Dornier 228 aircraft is being used by the Indian Air Force and the Coast Guard and HAL and the manufacturers of these planes, HAL is also exporting it to other countries.
The RCS has been set up under the New Civil Aviation Policy, 2016. The government plans to develop or revive 50 airports in next five years. Overall, the scheme targets to connect around 390 airstrips. Currently, there are 125 airports operated by the state-run airport developer, Airports Authority of India (AAI) of which 75 are only functional.
Air India is currently running on a Rs.30,000 crore bailout package under the financial restructuring plan for the airline’s turnaround plan approved by the erstwhile Planning Commission in May 2012. Air India has massively shrinked its market share to mere 15%. In comparison, IndiGo, has a 39% share of the Indian domestic market.
It has so far spent Rs 21,000 crore from this package. Its liability and debt have peaked at Rs 51,000 crore. The ailing air carrier has recently reported a net profit of Rs.105 crore, a first in the last 10 years owing to low aviation fuel prices and crude oil prices. Crude prices are at $51.1 per barrel while it had peaked $136.31 per barrel, which had led left Indian carriers bleeding.