Indian Airlines Ltd, the country's largest domestic carrier, will dry-lease three Airbus A320 planes by the end of February and another two by the middle of the year to boost market share, its chairman said on Tuesday.

The state-owned airline had a monopoly over domestic air travel until 1994 when the government threw open the sector to private companies.

Since then, Indian Airlines has steadily lost market share to privately owned Jet Airways and now has a 45 per cent slice of the market.

"We've had no addition to capacity since 1993. A decade of stagnant capacity is not too good for market share," Indian Airlines chairman Sunil Arora said.

"We dry-leased six A320s last year. We will be adding three more by the end of February and another two in the summer."

Indian Airlines currently flies five Airbus A300s, 36 A320s, two Dorniers and two ATR-42-320s. Its fully owned subsidiary, Alliance Air, has a fleet of 11 Boeing 737s.

Arora said the three planes to be added this month would partly compensate for six Airbus A300s that have been phased out in the past two years.

The two new planes to be acquired in the summer will be deployed on the most profitable trunk routes.

Arora said domestic market share had also been hit because the airline had to deploy a third of its capacity on international routes to neighbouring countries.

Arora declined comment on when he expected government approval for a Rs 100.89-billion plan to buy 43 planes from Europe's Airbus consortium that its board approved last March.

The deal, which includes a mix of A319s, A321s and A320s to be inducted between 2003-04 and 2007-08, is the biggest ever for an Indian airline and is needed to counter competition from booming domestic rival Jet Airways.

India, the world's 12th largest economy, is poised to be one of the world's fastest growing air travel markets.

Boeing Co., the world's largest commercial plane maker, has forecast air traffic within southwest Asia to increase at an average 8.7 per cent a year over the next two decades.

Arora also did not say whether he expected the government to approve a fresh equity infusion of Rs 3.25 billion that was recommended by a government panel some years ago.

The injection was meant partly to compensate for a government decision to ground its A320 fleet more than a decade ago and partly to strengthen its balance sheet.

Indian Airlines reported a net loss of Rs 2.47 billion in 2001-02, up 55 per cent from the previous year as its passenger traffic fell eight per cent.