In a major strategy shift, Indian Airlines will transfer its unprofitable routes into a stand-alone subsidiary, operating a mix of turboprops and jets. But the main aim is to counter its parent's shortage of senior pilots.
Airlines Allied Services will operate Indian Airlines' short haul flights, and take over maintenance, training, and ground handling services, which were recently set up as separate profit centres.
AAS is scheduled to start operations in March 1996 using six 50-seater turboprops - Indian Airlines is currently evaluating ATR, Fokker and Bombardier. The aircraft will be used in conjunction with an unspecified number of Indian Airlines' 18 B737-200s.
The turboprops will operate on routes in north east India, Jammu and Kashmir and Andaman and Nicobar, where low load factors on the state domestic carrier's B737s account for annual losses of Rs700 million ($20 million).
But an insider says the motive behind using AAS is to make up the shortage of captains. An Indian Airlines document puts this shortfall at 68. Union agreements prevent the recruitment of captains from outside Indian Airlines to protect the career prospects of junior pilots. By using the subsidiary to set up the new operation, the carrier believes it can circumvent the current contractual conditions.
The subsidiary will operate autonomously and lease aircraft from its parent. Employ- ees of the former feeder carrier Vayudoot will transfer to AAS. In a bid to boost revenue, the carrier put up fares by 20 per cent in October, generating Rs2.5 billion. Indian Airlines expects losses of Rs3 billion in 1995/6.
Source: Airline Business
