Keen to expand its domestic presence, AirAsia India is evaluating the proposition of operating regional flights with A320 planes under the government's UDAN scheme.
The ambitious UDAN (Ude Desh Ka Aam Naagrik) scheme aims to connect unserved and under-served airports in the country while participating airlines would get various incentives, including viability gap funding and other financial concessions.
AirAsia India, which currently has eight A320 planes, expects to have a fleet of 10 aircraft by end of this fiscal.
According to a senior airline official, options of participating in UDAN are being evaluated and a decision would be taken depending on the commercial viability of the regional routes.
"We are evaluating which routes can be served by A320. If it is viable, we will certainly look into it," the official told.
Manufactured by Airbus, A320s are single-aisle planes that can have up to 180 seats depending on the configuration opted for by the carriers.
Fares would be capped at Rs 2,500 for one-hour flights under UDAN and the first flight under the scheme is expected to take off in January 2017.
Along with increasing its fleet size to 10 planes, AirAsia India also expects to have a headcount of around 1,000 by the end of March 2017.
In the three months ended September 2016, the budget carrier saw its loss marginally narrow to Rs 62.18 crore from Rs 63.14 crore in the year-ago period.
However, revenues increased 31 per cent to Rs 175.11 crore in the latest September quarter. The same stood at Rs 132.95 crore in the same period in 2015.
AirAsia India, now a joint venture between Tatas and Malaysia's AirAsia Berhad, began operations in June 2014.
Tata Sons owns 49 per cent stake while two of the airline's directors -- S Ramadorai and R Venkataramanan -- have 2 per cent shareholding, and the remaining is with AirAsia Berhad.
Meanwhile, Malaysia's AirAsia Berhad has invested additional funds to the tune of Rs 115 crore in AirAsia India.