Article Posted on : - Sep 22, 2008

NEW DELHI (BNS): Air India will lease out two of its old aircraft and has received loan guarantees worth $548.6 million from Export-Import bank of US for buying new ones.

The airline would invite global bids for leasing two Airbus A-310 aircraft after converting them into freighters. The conversion work has already started in Germany. Airline officials said the aircraft were being leased out as it could not find a profitable route in the country.

With plans to start its own cargo service shelved, the airline had no option but to lease out the aircraft. Officials claimed that the two aircraft would be ready in the cargo configuration by the end of this month. The airline has already converted six of its 737-200s into freighters after they became unsafe for carrying passengers.

It has signed leasing agreements with India's postal department India Post and logistics company like Gati for the six aircraft. Gati will compete with India's domestic aviation cargo leader Blue Dart Express which is owned by DHL. India Post wants to have three more aircraft. At the moment it relies on a single aircraft.

As far as the fleet augmentation is concerned, Air India is looking to buy new modern Boeing aircraft. Air India has a plan to purchase 68 Boeing aircraft as it aims to become a global player. It signed loan guarantee agreement with Ex-Im bank in Washington yesterday.

The airline is expecting to increase its network by adding new aircraft. The fresh fleet would mainly comprise of Boeings. The Washington-based bank has given the guarantee to buy eight of these aircraft from Boeing. India's national carrier is facing stiff competition from private players. The Indian government has recently opened some routes on the international sector to foreign airlines.

Domestic companies like Jet Airways and Kingfisher have elaborate plans to exploit the policy and give a stiff fight to the national carrier on these routes. Jet is running flights to destinations in Europe and the US. The markets are growing, said officials, with more people traveling to centers across the globe. Air India still controls the market as the government is not keen to open all the sectors for private players.