Air-India may shelve low-cost airline plan

Air-India may shelve its plan to begin a low-cost airline. The Air-India board of directors has set up a special committee headed by N Vaghul, ICICI Bank chairman, on Saturday to take a final view on the matter. Vaghul is a member of the airline's board.

Preliminary feasibility studies conducted by the airline have revealed that it would not be commercially viable to begin no-frills operations.

Sources in the ministry of civil aviation said that as lot of hype had been created about the low-cost carrier, the setting up of the special committee is merely a face-saving mechanism.

Other members of the committee are Sunil Arora, managing director A-I, V Subramanian, additional secretary and financial advisor in the ministry of civil aviation and R Menon, joint secretary in the ministry of civil aviation.

In June this year the A-I management had decided to start a low-cost airline, Air India Charters Ltd, from Kerala to the Gulf.

Subsequently, in August the airline decided to extend the operations to include other passenger destinations besides the Gulf and Kerala.

According to sources, before even having a rudimentary cost-benefit analysis in place, A-I recruited a cabin crew for the venture on a contract basis.

Though the recruitment has been halted, the airline now is in a legal fix regarding the crew.

The airline may have to weigh the option of using AICL as a subsidiary to carry out extra operations during the peak winter season.

Sources said that a low-cost subsidiary would not be feasible as A-I had no planes to spare or the financial resources to buy or lease aircraft for the venture.

Also, as there were no low-cost airports in the Gulf, south-east Asia or India, airport charges would be prohibitive.