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September 25, 1997


IA subsidiary Alliance Air to phase out its Boeings

Alliance Air, a fully-owned subsidiary of Indian Airlines, is all set to phase out its 12 Boeings by next year and have zeroed in on three top aircraft companies for purchasing new aircraft, said Managing Director Vinod Kashyap

Alliance Air at present flies with 12 Boeing 737. "These aircraft are not old in the context that they are unsafe," pointed out Kashyap. "But they are fuel guzzlers and affect the cost structure."

The aircraft under evaluation for purchase are the 100-seater Boeing 737-600, the 120-seater A-319 from Airbus Industrie, and the 100-seater McDonnell Douglas MD-95. "The final decision will be arrived at after a committee for this purpose presents its report,'' said Kashyap.

The committee was set up in August last under J R D Rao, deputy managing director, Indian Airlines, and which is to submit its final evaluation within 10 months.

Kashyap, however, declined to state the exact time frame for the new aircraft to be replaced, ''The final decision is very important and it involves huge sums of money... So the evaluation is definitely time consuming.''

Each new plane will cost US $20-25 million

With a turnover of Rs 2.66 billion in 1996-97 and a projected revenue of Rs 5.5 billion for 1997-98, Alliance Air, which took its first flight on April 15, 1996, has turned around the bleak scenario that had affected it ever since the government introduced the open-sky policy in 1991.

Today, with 102 pilots, 213 cabin crew, 34 engineers, and 85 flight dispatchers (who prepare the flight path), Alliance Air has contributed Rs 1.1 billion to Indian Airlines' exchequer, which is expected to rise to Rs 2.5 billion in 1997-98. This has considerably improved the state-owned Indian Airlines' bottomline.

''We were able to keep our costs down through synergy and total cooperation with Indian Airlines,'' pointed out Kashyap. He said measures like frequent usage of aircraft, putting the cabin crews in pairs per room in hotels which are not necessarily five-star, etc had helped cut costs.

Moreover, pilots are neither picked up nor dropped home, and are paid actuals on taxis. Medical allowance and compensation for residence is not given. ''All this has not dettered our staff as can been seen from the fact that nobody has left us till date, which is a major achievement,'' the managing director said proudly. "Even the pay is less," he added. "Its 60 per cent less than Indian Airlines for the cabin crew, and five per cent less for the pilots."

He felt that most of the staff stayed on, especially the pilots, because of an assured wage packet and the backing of the Rs 30 billion Indian Airline backing. A guarantee of flying a 'safe' aircraft and a workable atmosphere lacking the 'servant-master' relationship found in private airlines, are the reasons for the staff loyalty.

Talking about the Northeast Airlines, Kashyap said that ever since Vayudoot closed down in 1993, the government has been toying with the idea of either bringing in a separate set-up for the northeast or supplying fuel at a cheaper rate to fly in the region. ''The stretches are extremely expensive; loads are poor, fares are low, and distances are short and it works out very costly per unit,'' he said.

The managing director pointed out that Alliance Air did not fly on the trunk routes and concentrated on the major tourist resorts, state capitals, the northeast, Leh, and Port Blair. ''We are not in competition with Indian Airlines. Only Alliance Air flies seven days a week to Port Blair and 11 times a week to Leh, although the whole exercise is not economically prudent. Moreover, Indian Airlines today flies ten A300 and thirty A320, which are medium capacity aircraft."

Indian Airlines is the general sales agent for Alliance, looking after its reservation, overhauling, usage of inventory and spare parts of Indian Airlines, and airport handling.

''What is required is fine tuning,'' said Kashyap. ''We are still at an informal stage and there is a urgent need for a formal infrastructure. The managerial cadre has to be strengthened and there is a need to market our organisation in a big way."

Each Alliance aircraft logs in 27,000 hours of flying time per year. By 1997, the figure will rise to 28,000 hours, added the managing director.


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