Air India Express decision taken after Indian government decided to disinvest its stake in Air India
Air India Express, the low cost, wholly-owned subsidiary of Air India, has put its ambitious expansion plans for the Middle East on hold following the government’s decision to disinvest its stake in India’s national carrier, a senior airline official has said.
“We have put our expansion plans in the Middle East sector on hold for now in view of the government decision to pursue disinvestment in Air India,” a senior official of Air India Express, who requested not to be identified because of the sensitivity of the issue, told Arabian Business.
Barring Singapore, Air India Express operations are entirely focused on the Middle East sector, with a network of 12 destinations in the region. The airline has been performing well in the sector, catering to the price-sensitive customers on the Gulf routes.
Air India Express CEO K Shyam Sundar told Arabian Business that the proposed expansion plans of the airline in the Middle East entailed long-term capital commitment towards leasing of aircraft, which requires long-term capital outlay of 8 to 10 years.
“Decisions on such commitments on long-term capital outlay may not be prudent at this juncture because of the current situation,” Shyam Sundar said.
Air India Express officials said the airline requires medium-to-long haul aircraft to operate to some of the destinations in the Middle East, including countries like Saudi Arabia.
Air India Express sources told Arabian Business that the airline had plans for a major capacity expansion in the Middle East sector with several additional flights to destinations in GCC such as Abu Dhabi, Sharjah, Muscat, Ras Al Khaimah and Kuwait.
The budget carrier was also planning to bring more cities, including tier 2 and 3 cities, in some of the Northern Indian states like Uttar Pradesh and Bihar to tap the surge in the expat Indians travelling to the Gulf region for work.
“With the shift in labour movement to the Gulf region, especially in the construction and other low earning jobs, from Kerala and nearby southern states to northern states like UP and Bihar, there is big opportunity for the airline to launch new and additional flights from some of the northern cities,” a senior Air India Express official said.
Currently Air India Express operates to 12 international destinations – Dubai, Sharjah, Abu Dhabi, Al Ain, Ras Al Khaimah, Dammam, Riyadh, Kuwait, Muscat, Salalah, Doha and Bahrain in the Gulf sector from 20 Indian cities.
The Indian cities it operates include Kannur, Kozhikode, Kochi, Thiruvananthpuram, Bengaluru, Chennai, Mangalore, Mumbai, Pune, Amritsar, Chandigarh, New Delhi, Lucknow, Varanasi, Jaipur and Surat.
Efforts to privatise Air India is currently underway, with the Air India Specific Alternative Mechanism (AISAM) expected to issue bid documents for inviting expression of interest soon. The government is said to be targeting October this year to reach a deal on the privatisation.