Air India Express will be a low-cost carrier

New Delhi, July 14 : Maintaining that low fare carriers were the need of the hour, Civil Aviation Minister Praful Patel Tuesday said national carrier Air India will launch its own low-cost carrier under the existing Air India Express, which currently flies to 14 international destinations.

"Air India Express will be our low-cost carrier and it has to be given a meaningful role. The fact is low cost airlines are doing much better than legacy carriers," Patel told Rajya Sabha, Indian parliament's upper house.

The minister, however, did not indicate when Air India Express would start operations as a low cost carrier, though officials said it would be in September.

Patel said several foreign carriers such as Tiger Airways, Air Jazeera, Air Arabia and Silk Air will also operate as low-cost carriers.

Referring to stake dilution in the national carrier, he said Air India would continue as a public sector unit and had no immediate divestment plans.

"There was a move in 2002 during the NDA government for disinvestment in Air India but soon after our government took over in 2004, we decided to take a conscious decision against it," the minister said in Rajya Sabha.

Responding to concerns raised by members of the house on Air India's mounting losses, Patel admitted the merger of Indian, the government's erstwhile domestic carrier, with the then international airline Air India last year has not worked to expectations.

"Merger has not worked to our satisfaction. The decision was taken after a well laid out check and balances. Employees should introspect," he said.

Patel said the merger was a detailed exercise, "done through a complete process where an Empowered Group of Ministers, the cabinet and departments concerned were involved" and was "approved by most of the employees".

He said before the merger, Air India and Indian Airlines had incurred a loss of Rs.541.3 crore and Rs. 230.97 crore respectively in 2006-07.

"In 2007-08, the combined airline posted a loss of Rs.2,226 crore and during 2008-09, the expected loss is about Rs.5,000 crore. The accumulated losses of NACIL (Air India's holding company) as on March 31 this year is likely to be in the range of Rs.7,200 crore," Patel said.