THE National Aviation Co of India Ltd, the state-owned company that runs the carrier Air India, plans to raise US$1.15 billion of loans to purchase new aircraft from Airbus.

National Aviation wants to buy 21 single-aisle planes from Airbus, according to the Mumbai-based carrier's Website. India's government has guaranteed the loans, it said.

Air India needs new planes as Jet Airways, the nation's largest domestic carrier, and billionaire Vijay Mallya's Kingfisher Airlines expand their fleet to tap growing demand, Bloomberg News said.

India's government created National Aviation last year by merging Air India and its domestic counterpart Indian Airlines. Air India had ordered 68 aircraft from Boeing and Indian Airlines 43 from Airbus.

The airline has already taken delivery of 16 planes, according to the Website.