When state-run Indian Airlines ordered its overweight flight attendants to lose weight last month, it was a small sign that some instinct for self-preservation still stirred in its withered breast.

Observers of the aviation industry over the past decade could have been forgiven for thinking that it was all over for Indian Airlines, which flies mainly domestic routes against better-run private airlines.

Yet the carrier has re-launched with a new name, (just "Indian"), new logo, new colours, better food and in-flight service and, apparently, slimmer cabin crew.

It plans to offer in-flight entertainment and awaits the arrival of 43 new Airbus aircraft - a mix of A319s and A320s - to replace fleet that dates back to the 1980s.

In an era of intense competition and booming passenger growth, the 52-year-old airline is trying hard to hold on to its shrinking market share, which in the past year has slipped from 39 percent to 34 percent, The South China Morning Post reported.

A glitzy advertising campaign is under way to lure back the passengers who have deserted it for Jet Airways and Air Sahara, the two oldest private airlines. Almost half a dozen new airlines were launched this year, including Air Deccan, SpiceJet and Kingfisher.

Travelers have benefited enormously from Indian Airlines losing its monopoly and being forced to compete. The resulting fare wars have fuelled extraordinary growth in the US$6 billion (C$6.9 billion) sector, which is set to grow by between 25 percent and 30 percent next year.

In India, almost 23 million people have travelled by air this year, up 53 percent from more than 15 million last year. This figure is expected to rise by 5 million passengers every year to reach about 50 million by 2010.

"We’re sending out a strong signal that we’re ready to take on private airlines. We can do it," Civil Aviation Minister Praful Patel said.

The launch of so many new airlines has resulted in some happy spin-offs, such as jobs for pilots and training institutes for airline staff. New training centres for flight attendants are popping up all over India, where air travel still holds a lot of glamour for flight attendants.

"About 21,000 to 40,000 job vacancies are expected in the next three to four years, just for cabin crew jobs," said K.S. Kohli of the Frankfinn Institute for Air Hostess Training in New Delhi.

"It’s their on-schedule flight performance and handling of passenger services that will determine if they succeed or fail," said the chief executive of a private airline.

Another problem is that government’s new "open-skies" policy allows domestic airlines to fly on international routes that were previously the sole domain of Indian Airlines and Air India, also state-owned. Now that Jet and Sahara can fly to Southeast Asia, Europe and the United States, both state-owned airlines face the prospect of greater losses.

Indian Airlines’ flights to the Arabian Gulf, which account for about 12 percent of its revenues, are under threat as private airlines have been allowed to fly these routes too.

Worse is to come. Four or five more discount airlines are being launched next year. With so much competition, it is no wonder that Indian Airlines and Air India are offloading about 20 percent of equity next year in an initial public offer to raise capital.

"If it hadn’t been for Jet and Sahara, we’d still be stuck with shabby planes that never left on time, no apologies or explanations for the delay and getting inedible meals served by rude cabin crew," said frequent air traveler Avinash Gupta, a software writer.

But this massive expansion is likely to culminate in a shake-out, although analysts believe this probably will not happen until towards the end of next year.

"A dramatic consolidation is likely because there are too many players. There is no way the market can support so many. Only two or three strong ones will survive," said Amitabh Ghosla, an aviation expert at the Confederation of Indian Industry.

The first signs are already discernible. Debt-ridden Sahara is desperately trying to raise funds.

"Sahara has found itself squeezed in the middle," said aviation industry writer Anjali Bhargava. "It doesn’t command a big enough share of the market to compete with Jet and yet also has to contend with budget airlines like Air Deccan."

In the various permutations and couplings being discussed, both Kingfisher and Jet have indicated that they may have designs on Sahara. Or Kingfisher may outbid Jet to buy a stake in Sahara. If it does, Kingfisher and Sahara could together look at buying SpiceJet. This will make the new entity a strong rival for Jet.

"If Sahara merged with Jet or Kingfisher, it would be a disaster for Indian Airlines," Bhargava explained.

"Its revamp would be a total waste of time because the merger would offer passengers a bigger fleet and better connections."

From the indications so far, Air Deccan looks set to emerge as a strong player. It has consolidated its position and now operates more routes than Indian Airlines or Jet.

It has revived previously defunct airports by flying to small towns that no other airline bothered with. But its biggest challenge is getting its flights to leave on time.

But as a state-run airline, Indian Airlines’ biggest drawback is a work culture that is unresponsive to customers because staff are guaranteed jobs for life.