With the pull-out from Frankfurt, AI will be flying only to London, Manchester, Paris and Rome in Europe. AI has consistently been reducing its European destinations. It had earlier pulled out of Geneva and Amsterdam.

AI's reason for pulling out of Frankfurt is that it is making losses on this route. However, industry sources said that AI's main problem arises from capacity constraints. AI has only 26 aircraft, and utilising them world-wide on the high visibility and high yield routes is not possible. "Air India needs to desperately add capacity" said an official of a rival airline.

AI is employing code share arrangements with other foreign airlines to service the European destinations. It has a code share with Swiss Air for Zurich. Its flights toseveral European destinations such as Lisbon and Paris are worked by a code share with Air France. Sources in the airline said that efforts are on to redeploy the Boeing 747-400 which is currently servicing the Frankfurt route. The Boeing aircraft will be used on a more profitable route.

AI currently flies thrice weekly to Frankfurt, twice from Delhi and once via Mumbai.

AI's impending move to pull-out of Frankfurt is bound to bring cheer to rival airlines, especially Lufthansa which services the Delhi-Frakfurt sector intensively. The German carrier has already been gaining at the cost of Air India as it flies to even the smaller destinations of Germany, providing timely connections out of Frankfurt.

Lufthansa, unlike Air India, has no intention of ignoring the out-bound traffic from India to Germany. The carrier has been pressing for more traffic rights from the Indian Government.

AI has gradually been concentrating on only the Gulf routes from where it also draws most of its revenue. Over the 80s,this has changed the carrier's image from an international carrier to a regional operator.

AI needs to put its house in order if it has to take competition head-on. Experts have suggested remedies such as disinvestment y the Government and a sprucing-up of its balance sheet as immediate medicines to cure its ills.

AI is expected to record losses of around Rs 200 crore at the end of the current fiscal. It also has to deal with mounting staff costs, an interest burden which is eating into the company's bottomline, and galloping maintenance bills for its aircraft.