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Air India is gone. Let’s talk about the little airline govt is still holding onto

Alliance Air, a fully-owned subsidiary of Air India, was not a part of the privatisation process and has a fleet of 18 ATR 72-600 aircraft.

October 11, 2021 / 10:43 AM IST

As the excitement over Air India’s disinvestment dies down and the Tatas shift focus from winning the battle to running the airline, the government team looking in charge of the disinvestment must be heaving a sigh of relief. To get rid of Air India during COVID-19 helps the government not only save much-needed cash (Air India is recording a loss of Rs 20 crore a day) it is also likely to help speed up other disinvestments.

While the core focus is in the belief that the government has no business being in the business of hospitality or aviation, one small airline will continue to be part of the government portfolio. Alliance Air, a fully-owned subsidiary of Air India, was not a part of the privatisation process and has a fleet of 18 ATR 72-600 aircraft.

The regulator clubs Alliance Air’s data with Air India for the calculation of market share. In July, Alliance Air operated 2,185 flights — an average of 70 per day — and carried 70,363 passengers, which would translate into a market share of 1.4 percent, ahead of regional players Trujet and Star Air.

Challenges from here on

Alliance Air or Air India regional is currently an all-ATR operator operating flights across the country, with the majority of them under the Regional Connectivity Scheme UDAN (Ude Desh ka Aam Nagrik).

Last year, the airline claimed that it had reached breakeven for the first time. The airline has all along had a close tie-up with Air India, even though it has a separate Air Operating Permit (AOP). Alliance Air will now need a separate website with a booking engine, reservation system and an IT infrastructure entirely different from its parent, which will be taken over by the Tata group in the next three months.

The operations thus far were along the lines of how Jet Airways and Jetlite operated. While Jetlite continued to have a separate AOP, the flights were marketed as Jet Airways. Here, Jet Airways is known as the marketing carrier while Jetlite is the operating carrier. From an operations perspective, the flights were managed by Jetlite and the airports as well as Air Traffic Control knew it as a Jetlite operation. The pilots used the call sign of Jetlite and operational filings would be done with the Jetlite airline code (S2). However, passengers never noticed all this since tickets were sold with Jet Airways’ flight code (9W) and Flight Information display boards at airports would also show flight numbers beginning with 9W.

Likewise, Alliance Air operates with the IATA code 9I but all its flights are sold on the Air India website, where Air India is the marketing carrier and every flight as an AI code. This will disappear come December. The flights were also available on GDS under the AI code.

The airline will now be on its own and will see its own PSS (Passenger Service System), website and more. The change will have to be communicated to the market and would mean additional expenditure.

The worry?

Air India was often accused of pleasing its political masters by launching flights that worked well for the ruling class. This often raked up huge losses and the flights were discontinued when the ruling dispensation changed — only to be replaced by another set of flights.

Air India did not attract bids last time and this was blamed on the fact that the government would continue to hold a stake in the airline. The fear of interference had led possible bidders to stay away. Now, the Tatas are 100 percent owners.

While Alliance Air has operated only a single type of aircraft so far, it will be inducting two Do-228 turboprop aircraft very soon. The Made in India aircraft will add to the complexity of the airline’s network and operations. It is unclear if Air India’s four B747s will be transferred to Alliance Air or scrapped. The bid document for Air India stated that the B747s would be transferred to Alliance Air.

With an airline still in the government hangar, let us hope this does not amount to political opportunism in the years to come, where the government of that day feels the need to get into the business and start draining resources all over again.

There has also been buzz about a possible sale of the airline. But Alliance Air in private hands may deal a jolt to the RCS-UDAN scheme since it has bid for many routes that private players haven't touched and this has helped operationalise many new airports across the country.

Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Oct 11, 2021 10:43 am