Air India to soon conclude lease of five Airbus A-320 planes

Written by PTI | New Delhi | Updated: Apr 2 2014, 00:35am hrs
Air India, which has issued a tender for 12 Airbus A-320s, would soon conclude the lease of five of these aircraft, which would be in an all-economy configuration, airline sources said today.

The national carrier's capacity is expected to grow by 9.2 per cent with the addition of six more Boeing 787 Dreamliners to the fleet, they said. As of February this year, the airline has 13 Dreamliners in its fleet out of a total order of 27.

With an enhanced fleet strength, Air India is targeting a domestic load factor of 76.6 per cent in 2014-15 and 74 per cent on the international front. It estimates that the number of passengers is expected to go up by over five per cent.

In the current financial year, Air India has projected a passenger revenue of Rs 16,400 crore, a growth of 14.5 per cent over Rs 14,300 crore in 2013-14.

It expects an operating revenue of Rs 21,300 crore compared to Rs 19,200 crore in 2013-14, the sources said.

A major cost reduction exercise was carried out in fuel costs, with the sources saying that despite the spurt in aviation turbine fuel (ATF) prices and currency fluctuation, Air India curtailed its fuel cost from Rs 2.10 per average seat per kilometre (ASKM) last year to Rs 2.03 per ASKM.

They said these savings were achieved due to the various steps by Air India to implement the fuel efficiency measures and undertaking fuel hedging.

The airline also implemented the recommendations of the International Air Transport Association's Fuel Efficiency Gap Analysis, under which IATA teams analyse and pin-point steps which the carriers could take to slash fuel usage and cut carbon emission.

The sources said Air India's subsidiaries -- Air India Air Transport Services Ltd (AIATSL) and Air India Engineering Services Ltd (AIESL), were also doing well.

While AIATSL, which carries out ground handling, is likely to be profitable from year one itself, AIESL, the engineering company, would become profitable in a year or two with the fast growth of maintenance, repairs and overhaul (MRO) business in India, they said.

AIESL has its main maintenance hangars at Delhi, Hyderabad and Thiruvananthapuram to service narrow-body fleet and for the wide-body hangar, it is Nagpur.

The third low-cost airline subsidiary, Air India Express, has also shown steady improvement in its physical and financial parameters by achieving a load factor of more than 75 per cent in 2013-14. It has projected a load factor of 80 per cent in 2014-15.

Air India Express turnover is expected to be Rs 2,000 crore in 2013-14 and is likely to increase by 20 per cent next year to over Rs 2,400 crore. It is expected to be cash positive in 2014-15, the sources estimated.

As per latest data, Air India recorded significant improvements in its performance parameters, estimating a huge 44 per cent cut in its operating losses in 2013-14 and an almost 20 per cent growth in its operating revenue since the previous financial year.

While the national carrier expects a 14.5 per cent rise in passenger revenue in 2013-14 to reach Rs 14,300 crore, its operating revenue is expected at Rs 19,200 crore, an increase of 19.6 per cent compared to the previous financial year.