Troubled Air India reforms cargo operations after state bailout

INDIA's Alliance Air, a unit of financially troubled Air India (AI) unit, will become an all-cargo airline as it transfers assets into the newly formed Air Alliance Services, which will also absorb the assets of AI's cargo division, reports the Business Standard.

The move comes after Civil Aviation Minister Praful Patel directed the AI board to prepare a plan to re-organise the holdings of the National Aviation Company Ltd (Nacil), which owns AI.

AI has received INR800 crore (US$174.7 million) in bailout money from the government to keep it going until March, and is cutting costs and working hard at generating revenue after suffering losses of more than INR7,000 crore.

The civil aviation ministry has also directed AI to increase use of its 100 Airbus aircraft, particularly the 320s. Daily use by other airlines amounts to 12 hours, but AI's 320 utilisation only runs to 8.7 hours.

Air India Express will also operate as a different entity and two new AI companies are being created: Air India Engineering Services Ltd and ground handling firm called Air India-Singapore Airport Transport Services, an alliance between Air India and Singapore Airport Terminal Services (SATS).

Alliance Air flies to 25 Indian destinations with 15 aircraft, mostly ATR-320s and Bombardier CRJ-700 ERs craft and specialises in short-haul routes in the northeastern India. All these aircraft will be converted into freighters.

Recently, its 737s planes were converted to freighters, but given to AI's cargo division. The Mumbai-based AI cargo division operates a fleet of 10 freighter services to 12 domestic and two international cities.

The present Alliance Air employs 768 staff, 729 of which are on contract. It suffered INR56 crore (US$12.2 million) in operating losses in 2007-08.

(Source: www.schednet.com)