New Delhi, Aug. 13: Air India has decided to take 19 new Airbus A-320s on dry lease for six years to fight competition from low-cost airlines.
According to Air India officials, the step is part of its turnaround and financial restructuring plan.
Sources said the acquisition would enable Air India to kick-start its plans for a low-cost subsidiary to take on IndiGo Airlines and Kalanithi Maran-owned SpiceJet.
According to Australia-based aviation body Centre for Asia Pacific Aviation (Capa), the absence of a low-cost arm in the domestic market, where Air India performs relatively well, has dented its market share.
The airline has invited global technical and financial bids to dry-lease these planes, which will be all economy carriers. The technical bids will open in September.
Dry lease is an arrangement under which an aircraft is provided for a limited period without a crew, supporting staff, insurance, equipment or maintenance. In comparison, a wet lease is one where these add-ons are supplied.
At present, Air India has 18 A-320s, of which 12 are owned and six sold and leased back , 24 A-319s (19 owned and five leased) and 20 owned A-321 aircraft in its fleet.
The sources said the deliveries of these 19 leased aircraft should preferably begin from the fourth quarter of this year when the national carrier would require seven of them. It proposes to acquire four more in 2014-15 and eight more in the next fiscal in a phased manner.
The decision to lease these all-economy aircraft came amid strong indications of a growth in competition from no-frill carriers and the entry of AirAsia India in the domestic market.
According to the Directorate General of Civil Aviation, no-frills airlines control more than 60 per cent of India’s domestic skies.
Meanwhile, Air India has set up a panel to negotiate compensation from Boeing for losses suffered from the grounding of the B787 Dreamliner aircraft following incidents of battery fires.