State-run Air India plans to lease four Boeing aircraft along with its pilots and

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cabin crew for its no-frill carrier AI Express and take 10 Airbus planes on dry-lease to expand its own network, sources said.

Though the airline had floated tenders in November to dry-lease four Boeing 737-800 for its wholly-owned subsidiary Air India Express for upto five years, an office order was issued last month saying "it has been decided to wet lease four aircraft for Air India Express."

Wet lease is an arrangement in which the lessor provides an aircraft along with the cockpit and cabin crew and pays for its maintenance and insurance. The company which wet leases the plane pays by the hours it is operated. In dry lease, only the aircraft is leased out.

The B-737s were being wet leased "in order to augment capacity to meet the surging demand and also the demands from MPs of Punjab and Kerala to restore the original (flight) schedule," the order signed by AI CMD Arvind Jadhav said.

Air India Express operates mainly across the Gulf and South-east Asia, and currently has a 21-aircraft fleet in which 17 are owned and four are on lease.

The wet-lease move has baffled some officials who said that wet leasing was always costlier than dry lease and there was no shortage of pilots in Air India Express.

Requesting anonymity, they said Air India had to cough up Rs 130 crore in the 1990s to terminate a short-term lease agreement for two Airbus A310-300s with Antigua-based aircraft leasing company Caribjet after an arbitration. It also had to spend Rs 10 crore on the litigation.

In a related development, the national carrier floated tenders to dry lease 10 A-330s for five years with the option of extending the lease period by another two years. The deliveries of these aircraft would be preferred from the second quarter of this year, the tender document said.

The Airbus planes should be manufactured in 2009 or later but the airline would consider four year old planes if it did not get proper response for the newer ones, it said.

The document also announced Air India's intention to sub-lease two A330-200 aircraft, currently in its fleet, till 2014.

Air India's aircraft acquisition and leasing policies have come under severe criticism from the Standing Committee on Transport, Tourism and Culture and the Committee on Public Undertakings, which have recommended that these policies be relooked in the interest of the national airline.