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Alliance Air (India)

Alliance Air (formerly Air India Regional) is a wholly-owned subsidiary of AIAHL (AI Assets Holding Ltd.) which is a special purpose vehicle formed by the Government of India after the disinvestment of Air India Limited. It was founded in April 1996 as a wholly-owned subsidiary of Indian Airlines (later merged with Air India in 2011 and remained a subsidiary till 2022) and mainly operates domestic routes as part of the government's Regional Connectivity Scheme. Government of India notified Alliance Air as Designated Indian Flag Carrier.

History

Alliance Air was founded in April 1996 as a wholly-owned subsidiary of Indian Airlines. The parent company wished to make better use of its Boeing 737 fleet, so it wet-leased 12 of these aircraft to Alliance Air. The subsidiary operated its first flight on 15 April 1996. Alliance Air served as a low-cost feeder airline for Indian Airlines, providing connections to the latter's hubs from various smaller cities across the country. In 2002, the airline was offering flights to 44 destinations in India utilising a fleet of 11 Boeing 737-200s. On 1 April 1997, Vayudoot Airlines, a joint venture of Air India and Indian Airlines, merged with Alliance Air to serve the regional air routes of Northeast India and several other parts of India.

In November 2013, Air India announced that it would dry lease eight ATR-72 aircraft to replace Alliance Air's ageing fleet of ATR-42 and CRJ-700 aircraft. The airline inducted its first ATR 72-600 aircraft in to its fleet in December 2014. The last CRJ aircraft was phased out in 2017.

In 2016, the airline was delegated to kick-start the Indian Government's Regional Connectivity Scheme to connect unserved and under-served airports in the country. The airline hence placed orders for ten ATR-72 aircraft in October 2016.

Alliance Air began operating its first scheduled international flight from Chennai to Jaffna on 11 November 2019. Alliance Air announced that it had recorded an operating profit for the first time in its history during the 2019-20 fiscal year. The airline made an operating profit of ₹65.09 crore (US$8.2 million), but still ended the period with a net loss of ₹201 crore (US$25 million). The airline stated that it had adopted the new IND AS 116 accounting standard, and would have actually recorded a net profit of ₹37 crore (US$4.6 million) under the previous standard.

Alliance Air's parent company, Air India Limited, was sold to Tata Sons on 8 October 2021. However, Alliance Air was not a part of the deal, and was instead transferred to Air India Asset Holdings Ltd (AIAHL), a state-owned special purpose vehicle that holds Air India's remaining assets and liabilities. The Economic Times reported that the government also intended to sell Alliance Air and use the proceeds to pay down AIAHL's debt. Alliance Air was valued at around ₹2,000 crore (US$250 million). Alliance Air started functioning independently of Air India on 15 April 2022 and started selling its tickets under the Alliance Air banner.

Alliance Air signed an agreement with Hindustan Aeronautics Limited (HAL) to lease two 17-seater Dornier 228 aircraft in September 2021. The first aircraft was delivered to Alliance Air on 7 April 2022. The Dornier 228 had previously only been used by the Indian Armed Forces but was modified by HAL for commercial operations. Alliance Air deployed the aircraft on a new route connecting Dibrugarh, Assam, and Pasighat, Arunachal Pradesh, on 12 April 2022, becoming the first airline to use an Indian-made aircraft in civil aviation operations and the first commercial airline in the country to operate the Dornier 228 aircraft.

Alliance Air signed a deal in February 2022 to acquire two ATR 42-600 aircraft for serving challenging airfields in the Himalayas.

Destinations

Alliance Air operates to 75 destinations in India as of November 2022. It operates regional services in India through its hubs in Bengaluru, Delhi, Hyderabad, Kolkata and Mumbai. The airline started its first international flight from Chennai to Jaffna on 11 November 2019 but temporarily had to halt operations from Chennai due to the COVID-19 pandemic. The connection was eventually resumed on 12 December 2022.