Air India Express – the low-cost subsidiary of national carrier Air India – is expected to make a profit of Rs 250 crore in FY16 as opposed to a loss of Rs 61 crore in the year-ago period on the back of higher aircraft utilisation, increased operational efficiency and decrease in jet fuel prices.
A senior official of the airline told FE that the airline is also expected to report an operating profit of more than Rs 600 crore. This is a welcome development for the airlines as it’s trying to spread its wings outside in different parts of the country.
The above mentioned official also mentioned that the low cost airline is set to increase its yearly revenues to Rs 2,800 crore approximately which is an increase by 8% y-o-y. This has been possible as the oil prices have come down significantly in the last one year and the airlines has managed to maintain a passenger load factor of 83% in the midst of intense competition on the routes to the Gulf countries from the indigenous carriers like Indigo, SpiceJet and Jet Airways and foreign airlines.
This turnaround in operations came at a time when the number of aircraft has come down from 24 planes in 2013 to 17 aircraft in 2016. The higher utilization of aircraft is one of the principle reasons and the utilization capacity has increased to 11.5 – 12 hours per day which his close to that of competitors like Indigo, Jet airways and SpiceJet.
In order to consolidate its position as India’s most preferred carrier to the gulf countries Air India Express has announced daily flights from Mumbai to Dubai and Sharjah from the first week of April. It also announced new daily flights from Delhi to Dubai and Abu Dhabi route.
Consequently, the low cost airline is taking new 737 Boeing aircraft on dry lease from GE Capital Aviation Services, funding for which will come within the organization and will be treated as a revenue expenditure.
“We planned the new flights from Mumbai and Delhi, so that we can utilize our crews based there more efficiently. Our first flight between Mumbai to Dubai is already 30% – 40% full with almost a month to go. We are expecting the load factor to remain between 80-85%,” said an official.
The number of passengers from India to Dubai corridor has increased 7 million and the outbound traffic has grown around 12% – 15% last year.