Besides expanding operations to other parts of India, Air India Express, a subsidiary of Air India, would start services to South-East Asia in the second phase of its operations based on bilateral issues and availability of aircraft, Civil Aviation Minister Praful Patel said.

He said the number of passengers travelling to Gulf by Air India and Indian Airlines had increased from 20.4 lakh in 2001-02 to 22.3 lakh in 2002-03 and 24.38 lakh in 2003-04.

Asked whether government planned to increase the number of flights to Gulf, Patel said while increasing flights depended on bilateral agreements and the assessment of traffic demand on different routes, foreign airlines were allowed to mount additional services during limited open sky policy in the peak season.

He said the air traffic services to Gulf had been restricted to A-I and IA for three years and no private Indian carrier would be allowed to operate during that period.

The step was taken to ensure the health of the two public sector carriers on these profitable routes.

In reply to another question on fleet acquisition of A-I and IA, Patel said final negotiations have been initiated with the lowest bidder following Public Investment Board approval of the IA's proposal for buying 43 aircraft from Airbus Industrie with engines from CFM International.