Air India to lease 40 aircraft to meet growing demand

State-run Air India Ltd plans to lease 40 new planes from Canada's Bombardier and France's Airbus as it looks to take advantage of a burgeoning middle class in Asia's third largest economy.

The Indian carrier plans to ask the two manufacturers to submit financial terms for the orders of up to 20 planes each, it said on its Website, a few days after rival IndiGo placed the largest jet order in commercial aviation history at USD 15.6 billion. Air India seeks to lease between 16 to 20 Bombardier CRJ-700 planes for five years with an option to extend the lease by two years. Air India has also invited lease quotes for 10 Airbus A330 aircraft and 10 A320s, it said in a tender document. Air India operates a fleet of 135 aircraft, 27 of which are leased. The carrier, which has been losing money and struggling with high debt, in December received approval from the Indian government for an equity infusion of Rs 12 billion. Air India has also sought an additional Rs 20 billion from the government to cut debt and expand. India's airlines are seeking to raise capacity by adding fleet to meet increased demand for air travel. Passenger air traffic in India grew 19% through November last year. Many Indian carriers are growing their fleets as demand booms in India, where the economy is growing at nearly 9%. SpiceJet in November agreed to buy 30 Nextgen turboprop aircraft from Bombardier for as much as USD 915 million. Jet Airways, India's top carrier, has placed orders for 49 aircraft for deliveries expected to begin in April 2012.