Air Asia India — a joint venture between Tata Sons and Air Asia – is likely to break-even or report profit by 2019 despite substantial rise in fuel and staff cost which took a toll on its bottom-line during January-March quarter of the current calendar year which is the first quarter of its financial year. Apart from expanding in the domestic market, the management is in the process of finalising the plan for the international operations which is expected to start by the end of next year. The no-frill carrier is also focussed on increasing the fleet size and utilisation of its existing A320 aircraft besides enhancing profit margins by improving its offering for corporate travelers. Amar Abrol, chief executive officer, Air Asia India told FE that the airline will continue to invest in the right products and is adequately funded to expand its domestic operations. “Financially we are headed in the right direction and confident of breaking even by 2019. We have trimmed our losses and increased our fleet size. The average utilisation of our aircrafts are more than 13 hours which is quite good and load factor (PLF) is also close to 90%. Though fuel cost has increased our CASK is probably the lowest in the industry,” Abrol said.
In the first two quarters of the current fiscal the no-frills carrier made revenues worth Rs 100-110 crore per month from ticket sales. The ancillary revenue has also increased to 9-12% of the total revenues. “Yields have been under pressure and the second quarter is usually very lean but we have registered better yields than our competitors. We can’t control the fuel price but will have to increase staff because of expansion of our operation. The top-line has improved and we will continue to innovate our new products,” explained Abrol. Air Asia India reduced its net losses by 13.65% y-o-y to Rs 40.49 crore during the January-March quarter of 2017 on the back of forex gains. While the the total revenue increased by a whopping 47.25 % y-o-y to Rs 282.10 crore. The fuel cost – almost 40% of the total operating cost – increased by 26% y-o-y to Rs 111.89 crore while the staff cost increased by 54.82% y-o-y to Rs 64.59 crore during the quarter. The youngest low-cost carrier in the country will add four new A320 aircraft by November this year and by October- November 2018 the fleet size will be increased to 20 aircraft. Air Asia will not go for a A320 Neo aircraft from Airbus like Indigo or GoAir unless the prevailing issues regarding the Pratt and Whitney engines get resolved. Besides expanding the domestic operations, the airline is in the final stages of deciding the road map for the international operations which will be placed before the board at the end of this year.
Air Asia India will venture to the ASEAN countries since the presence of its parent company Air Asia Berhad will help consolidate its international operations. “We will look east since our parent company is also there, hence it will be a natural fit for us. Air Asia is a big brand out there. In the next 3-6 months the plan for international operations will be finalised and subsequently to be presented in the board. We expect to start by the end of next year,” added Abrol. Vistara – another airlines with investment from Tata Sons – is also expected to start international operations by the end of next year.