The Civil Aviation Ministry has approved Alliance Air plan to launch foreign operations by starting flights to Sri Lanka even as the airline's parent Air India remains on top of the government's disinvestment agenda.
The move has triggered speculation among Air India employees that the government may continue in the airline business by not selling Alliance Air. This runs counter to the government's often repeated argument that "the government has no business to be in the airline business."
"The move suggests the government would not sell Alliance Air and continue in the airline business. Alliance Air could be an "Indian Airlines" in the making. We are unable to understand then why Air India is being sold," said an executive.
"Perhaps, it wants to keep an airline to serve political interests. Anyways, so many flights have been started after General Elections on recommendations of legislators," he added.
The permission for inaugural overseas flight has come even as Alliance Air's financial health remains precarious. The carrier reported a net loss of Rs 263.76 crore in 2017-18 as against the net loss of Rs 286.70 crore in the previous financial year.
The airline mostly connects tier-II and tier-III towns which are considered important for social and political reasons than commercial. Making most of the regional connectivity scheme launched by the government, it has bagged rights to operate various Udan flights.
As per Air India official website, Alliance Air operates air services to 52 destinations with a fleet of 18 ATR 72-600 (70/72 Seater) and 1 ATR 42-320 (48 Seater) aircraft. It has 800 flight departures per week and 114 flight departures per day.
Official sources told IANS that government has allowed Alliance Air to operate 7 flights a week from Chennai to Palaly and Batticaloa in Sri Lanka with its ATR 72-600 airplanes.
The government has decided to sell Air India lock, stock and barrel and a ministerial panel headed by Home Minister Amit Shah is set to finalise the terms of bidding it out. The express of interest (EoI) could be invited by the end of October.