Mumbai: State-run National Aviation Co. of India Ltd, or Nacil, which operates flag carrier Air India, has shortlisted German plane repair firm Lufthansa Technik AG and Virginia, US-based aviation consultant Simat Helliesen and Eichner Inc. to develop a network strategy and operational plan that would help it make the best use of its fleet and become part of a global alliance of airlines.

Streamlining operations: An Air India plane at India Gandhi International Airport, New Delhi. Nacil, which operates Air India, expects international revenue to expand 3-4%, or up to Rs400 crore, in a year. Harikrishna Katragadda / Mint

“Nacil is initiating a clean-sheet exercise for its network strategy," said a Nacil executive. “The (selected company) will carry out market analysis, including seasonality analysis, with updated market sizes and prediction of demand at various cities." Lufthansa Technik or Simat Helliesen would also study aviation hub development in India and abroad and make recommendations based on traffic flow and potential, added the executive, who didn’t want to be named.

Nacil, with a market share of 18% in August according to ministry of civil aviation data, is under greater pressure to improve its competitive edge after private-sector rivals Jet Airways (India) Ltd and Kingfisher Airlines Ltd, with a combined market share of 58.5%, formed an alliance last week to lower costs, as they reel under the impact of increased aviation fuel prices.

The Jet-Kingfisher alliance will see the country’s two largest private airlines buy fuel together, share infrastructure, and enter into code-sharing agreements that will allow them to reduce flights on selected routes.

Lufthansa Technik is a global player in the maintenance, repair and overhaul (MRO) segment for commercial aircraft, engines and components. Simat Helliesen is one of the largest consulting firms dedicated to the air transport industry.

Nacil, formed by merging Air India and Indian Airlines in August 2007, is gradually integrating the networks of the two carriers. It has more than 100 narrow and wide bodied aircraft on order for delivery in the next four years.

“Fresh approach for network planning and integrating two airlines is critical as we are readying ourselves to join an airline alliance by the year-end," said the same Nacil executive who requested anonymity.

Nacil, with projected losses of Rs2,000 crore in fiscal 2008 is in the process of joining Star Alliance, the largest operating grouping of global carriers, and expects international revenue to expand 3-4%, or up to Rs400 crore, in a year, after it integrates with other member airlines and extends its global reach. The low-fare subsidiary of Nacil, Air India Express, which currently operates on regional international routes, or West Asian destinations, also plans to launch domestic operations shortly.

Lufthansa Technik or Simat Helliesen, whichever is selected, will develop a network strategy for Nacil’s global operations in partnership with Star Alliance, and one for Air India Express. The project is expected to be completed in four months from the date of selection.

“The integration of Air India and Indian Airlines into Nacil is not happening at the desired pace. Therefore, Nacil needs to do something very urgent as the passengers will shift to whoever offers better services and fares," said an analyst with a domestic brokerage. He declined to be named as he is not authorized to speak to the media. The same analyst said the Jet-Kingfisher alliance plans to jointly deploy 189 aircraft on domestic and international routes and cross-sell flight tickets. Nacil has no such partner in the country.