Air India Express, the low-cost subsidiary of Air India, would pay an annual royalty to the parent company after it starts operations to the Gulf next month end.
The royalty would be paid for the use of Air India's bilateral rights for the Gulf sector, official sources said.
"Some money will be contributed by AI Express to AI as royalty for operating on the Gulf routes in order to enhance the revenue of the parent company," they told PTI here.
The no-frills carrier would also be asked at a later stage to take over some domestic operations of Air India from Indian Airlines besides carrying out its global operations.
Beginning April end, AI Express will fly a total of 37 flights a week primarily to Abu Dhabi and Sharjah. Three of these flights will operate from Mumbai and Delhi each, while 31 services will operate from Kerala.
On the issue of synergy between A-I and IA, talks on which are currently going on between the two airlines, the sources said several areas of synergising the operations of the two public sector carriers have been identified and some of them were in the process of finalisation.
The areas in which synergy talks were going on include operations, engineering and commercial, they said.
Asked to elaborate on the operational synergy, they said A-I would vacate certain routes for IA, but in some cases both would fly to the same destinations. Likewise, AI Express could also launch domestic operations to take over certain routes being flown by IA for A-I.
"Air India Express could therefore, become the domestic leg of Air India", the sources said.
Both the parent airline as well as its subsidiary could also operate on the same route, the sources said while giving an example of a destination like Dubai where a segment of passengers who would not opt to travel on a low-cost carrier.
Both A-I and AI Express could fly to Dubai to provide choice of travel, they said. Air India took delivery of the first of the three Boeing 737-800 for AI Express on February 23.
By March next year, AI Express plans to launch 127 flights a week, which will include providing direct connection from the four metros to the south east destinations and between Mumbai and Delhi to the Gulf.
