Barely a day after announcing a strategic and operational alliance with rival domestic carrier Jet Airways [Get Quote], Kingfisher Airlines said the new partners are willing to include state- owned Air India in the pact. 

"We are amenable to the idea of having Air India join the alliance," confirmed a top Kingfisher Airlines executive. Air India, however, declined to comment on the offer.

The Kingfisher-Jet Airways combine controls over 58 per cent of the domestic aviation market.

Should Air India, formed by a merger between flag carrier Air-India and domestic carrier Indian Airlines last year, join the club, its 14.7 per cent market share will give the alliance a dominant 72 per cent domestic share.

Meanwhile, the alliance, announced late on Monday night, may come under scrutiny of the Competition Commission.

"If this alliance leads to better efficiency for Jet and Kingfisher that, in turn, will help consumers with better service and no increase in fares then the matter will not come under our purview," Amitabh Kumar, director general, CCI said.

If, however, the alliance forces consumers to, say, opt for only these two carriers at peak hours or if fares rise in disproportion to escalating ATF prices, there may be a case to view the matter under the competition laws, Kumar told Business Standard.

Air India has made losses of over Rs 2,500 crore (Rs 25 billion) and has asked the government for a Rs 2,000 crore (Rs 20 billion) bail-out (which includes equity and a soft loan). 

Kingfisher and Jet are also under pressure. Kingfisher Airlines made a loss of over Rs 1,000 crore (Rs 10 billion) and Jet Airways Rs 806 crore (Rs 8.06 billion) in 2007-2008.

Both airlines were part of a recent industry-wide request to the government for a Rs 4,700-crore (Rs 47-billion) lifeline.

However, Air India will have just 149 aircraft to the Jet-Kingfisher combine's 189. The state-owned carrier has 32,000 employees to the private airline combine's 19,000.

To trim staff, which is strongly unionised, Air India is looking at a leave-without-pay scheme (under which AI staff can take leave for two to five years without pay and work elsewhere) to trim the numbers.

Air India executives, however, said the challenge is exaggerated. The airline will soon join the Star Alliance in the international market that will give it many of the advantages that Kingfisher -Jet is seeking.

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