Alliance Air Parts from Air India: A Good or Bad Divorce?

Pedro Aragão, CC BY-SA 3.0 GFDL, via Wikimedia Commons

LONDON – Alliance Air was once the regional arm of Air India serving remote places across India where A320s and the 737s are not capable of serving.

After the privatization of Air India to Tata Group, Alliance Air is let to run its operations with turboprops, creating a lifeline for many rural Indians by supplying essential goods and services.  

The Details…

Tata Group announced that Alliance Air “is no longer a subsidiary of Air India” as of 15th April.

This means that booking inquiries of all Alliance Air passengers will not be handled through Air India, and all of the flight numbers will be 9I-XXX instead of a 4-digit code belonging to the former parent airline. 

Alliance Air CEO Vineet Sood stressed the importance of the airline’s departure as an efficient move, being an ‘independent business unit of the Indian government’.

The airline operates 20 planes, 2 of which are Indian-built HAL Do-228 and 18 ATR-600s. 

Previously known as ‘Air India Regional’, this divorce could be said to be beneficial for the airline’s overall image.

It is no secret that Air India, an airline previously run and controlled by the Indian government was plagued with financial woes and mismanagement.

Controversy Amongst the Divorce?…

There is undoubtedly a huge sigh of relief when Air India including its subsidiaries of Air India Express and 50% of Air India – SATS are sold off to a private entity, the Indian state decided to keep Alliance Air under its eye. 

The stigma surrounding a government-owned entity is generally viewed in a negative light, especially in Asia.

Tata Group’s decision not to take Alliance Air may not be a bad decision after all as the airline serves part of India where others would not ever have served due to poor financial returns.

Thanks to a government launched a regional connectivity subsidy scheme called UDAN (Ude Desh ka Aam Naagrik) or translated to English ‘let the common citizens fly’.

These subsidies allow Alliance Air to open new routes that would never have been profitable, like flying from big cities to/between tier-2 cities. 

The airline CEO thanked the government by exerting how important subsidies are: “On this occasion, I would like to pay a note of appreciation to India’s travel fraternity for their continuous support, we cherish this trust.” 

Good Divorce Ahead of Complexity Down The Road?

The airline is also set to grow with 2 more ATRs joining the family later this year to serve the even more remote regions of the mountainous north. 

Alliance Air also operates 2 Indian-built Dorniers 228, a 17-seater regional aircraft, further aiding India’s manufacturing capability. 

It is safe to say that it is a good divorce for now, as Alliance Air seeks to expand its regional service with the aid of the UDAN scheme.

But, being a government entity may entail deeper complexity in management often marred with politics, faced by the likes of Air India, which is seen to be better off under private control. 

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