The Telegraph
Since 1st March, 1999
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Airline merger whets fleet appetite

New Delhi, July 22: The merged entity of Air India and Indian may buy more planes than the 111 ordered by them last year since their old carriers will be used by a new cargo subsidiary.

The airline will also take a call on using the Star Alliance of global airlines. It is exploring the possibility of being a part of the alliance, to connect to European cities and set up facilities at an European airport which will be its continental hub.

Senior civil aviation ministry officials said the merged airline would retire nearly 65 aircraft over the next three years. Moreover, with demand for both domestic and international travel increasing, the airline would need to add to its fleet strength.

The airline is likely to go in for a mix of aircraft purchases and dry leases. Many of the old aircraft are likely to be given to the new cargo subsidiary, which Air India plans to float.

Air India has already started flights to Europe with cargo freighters earlier this month. These were converted from old A310 passenger planes at a cost of $16 million. The flights terminate at Frankfurt and Paris. Indian Airlinesí freighter services, which it had started with five old planes, will be incorporated into the new cargo airline.

Growing exports of textiles and processed food, besides gems and jewellery, have boosted the demand for cargo flights. Existing domestic as well as foreign airlines are eyeing the lucrative cargo space. Analysts estimate that India needs 500 cargo aircraft over the next 15 years.

Air India is also keen on joining the Lufthansa-led Star Alliance. After the merger, Air India will meet the fleet strength criteria for joining the global alliance of airlines. With a fleet of 125 aircraft, it will benefit from Star Alliance that includes carriers such as Singapore Airlines, United, Austrian, Swiss and Air Canada.

Membership of the alliance, besides existing links with Lufthansa, can help Air India passengers fly to other European destinations from the hub that the airline is keen to set up in an European airport.

Sources said the Frankfurt airport was a possible hub. The airport is one of the busiest in Europe both in terms of passenger and cargo movements.

However, Germanyís low-cost Hahn airport, in which Fraport has acquired a major stake, could also be considered. Fraport operates the Frankfurt airport.

Though it is a second-rung airport, Hahnís facilities are comparable to many other airports such as Brussels, which Jet Airways has chosen as its hub. However, the hub is unlikely to be used as a major stop for transatlantic flights. Air India is likely to start direct, non-stop flights to San Francisco and Chicago from 2008, in addition to a Mumbai-New York flight to be launched from August 1.

Once the merger becomes effective from August 1, there will be a hub and spoke relationship between Air India and Indian.

Their schedules will be integrated to ensure Indianís domestic flights are linked to Air Indiaís international operations.

Indian flights from Chennai, Bangalore and Hyderabad will initially be fitted to the Mumbai-New York Boeing 777 flight.

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