Tata Group intends to extend the aircraft fleet of its budget carrier, Air India Express, with all-economy configuration planes from its full-service carriers, Air India and Vistara, as part of a move to better compete with market leader Indigo. According to those familiar with the proposal, Air India and Vistara planes with all-economy seating configurations will be transferred to Air India Express.

The first phase will see the transfer of 17 Airbus A320 Neo aircraft from Air India to Air India Express, while 10 of Vistara's all-economy A320 Neo aircraft will join the airline after Vistara's merger with Air India is completed, they said. The transfer is expected to be completed by the middle of 2025.

The salt-to-tech conglomerate is revamping its aviation sector, consolidating four airlines into two: Air India and Air India Express, which will compete in the premium and no-frills segments, respectively. "The group aspires to be very explicit in its brand positioning. These aircraft have all-economy seats and will fit better in Air India Express, which will be the brand's no-frills category," said a source engaged in the process.

Air India Express, he said, will add 17 Air India jets and 15 Boeing 737 Max planes from its own order by the middle of next year, boosting capacity increase. Over the past ten months, the airline has added 26 new Boeing 737-8 aircraft to its fleet.

According to global travel data source OAG, India has the biggest proportion of low-cost carriers (LCCs) in terms of total airline seats, accounting for 71% of available capacity. Earlier this month, Air India Express received final approval from the Directorate General of Civil Aviation (DGCA) to merge with AirAsia India, creating one organization.

"We will ride upon our huge fleet and network expansion, in the domestic India market and short-haul international region--unlocking synergies with the merger of the two entities, and network integration with Air India," according to the individual quoted before.