The proposal on the feasibility to float this feeder airline consisting of smaller aircraft would be discussed in the forthcoming board meeting of the airline next week.

Aviation ministry sources say that the airline was planning to induct six aircraft from French firm ATR in its 52-strong fleet to cater to its short haul operations. The existing big aircraft would be then pulled out to run on the more profitable trunk routes.

According to an estimate made by the airline, the plan is not economically feasible as the airline is already making massive losses with the existing fares in the short haul routes. In order to make money, the 50-seater aircraft wouldrequire a fare increase of 104 per cent in its existing routes while another 156 per cent fare hike has been proposed in the new routes.

In order to access the smaller cities with short runways in the north east region, the airline was planning to induct these aircraft at a total cost of Rs 400 crore. The feeder airline plan was also conceived to connect metro cities like Mumbai and Delhi with the industrial towns nearby.

The break even load factor for the north eastern and short haul routes has been estimated at a 75 per cent when the airline hardly manages to fill 60 per cent of seats in its Boeings.

In order to acquire these aircraft, the airline has asked the government to provide extra funds. The government has already committed to inject Rs 125 crore in the airline as equity investment in the Budget 1998. But with the present precarious financial condition of the government, the demand for extra fund is bound to be rejected, say sources.

The airline plans to go ahead with the acquisition despiteknowing that these operations will never make money and it will have to gradually increase fares by over 100 per cent to meet its operation costs.