Air-India is to launch a new subsidiary airline with 25 per cent lower fares with leased Boeing 737-800 aircraft from April next year.

The airline board, which met on Saturday, approved the starting of the new airline (low-cost operation) with an all-economy class layout through its subsidiary Air-India Charters Ltd to the Gulf and South East Asian countries, A-I sources said.

A-I would take 14 of these Boeings in three phases over a one year period beginning April and operate 127 flights a week from Kerala, Delhi, Mumbai and Chennai to the Gulf and South East destinations, the sources said, adding that most of these flights would be on a quick turn around basis.

Boeing welcomed A-I's decision to take on lease the 737-800s and said the aircraft would be made available by early 2005.

Dinesh Keskar, Boeing's president of aircraft trading, when contacted, said that these new generation aircraft are in great demand and if the tenders are floated quickly the jets would be made available to Air-India by the first quarter of next year.

Keskar, who is also the senior vice-president, said these jets can seat up to 189 passengers in an all economy class layout.