Air India Express records profits on higher load factor

Written by Shaheen Mansuri | Mumbai, Nov 30 | Updated: Dec 1 2007, 06:27am hrs
Although national carrier Air India is striving towards enhancing its operational efficiencies after posting losses of Rs 447.93 crore for the fiscal 2006-07, its low-cost subsidiary, Air India Express, in its second year of operations, has managed to post profits of Rs 7.48 crore in the same period. The companys operating revenues also increased from Rs 430.58 crore to Rs 706.82 crore, an increase of 64% for the fiscal.

An official from Air India Express said that the marginal profits were mainly due to the high passenger-load factor of 74% in the domestic sector and a per-passenger-yield of Rs 31.39 compared to Rs 30.85 last year. However, without divulging the profit figures in its first year of operation, the official said that the low-cost subsidiary had made small profits in the first year too (2005-06).

S Venkat, executive director finance, NACIL (National Aviation Company of India Limited), told FE, We have benefited from the increasing demand in the Middle East, where an average of 90% of the capacity was filled. Secondly, though the fuel expenses went up from Rs 108.49 crore to Rs 190.22 crore, constituting 25% of the operating expenses, we could battle the escalating fuel cost because of our fuel-efficient fleet, considered the youngest in the world. The airline added six aircraft during the year, increasing the fleet strength from seven to 13.

The airline carried over seven lakh passengers (domestic and international) compared to 4,97,000 in the previous year. Similarly, the revenue hours operated by the fleet increased from 12,543 to 21,357. The airline added several new international destinations like Colombo, Doha, Bahrain and Singapore and expanded its network in India to include Mangalore, Trichy and Amritsar.

Currently, Air India Express operates from 13 cities in India to 12 foreign locations. Venkat further added that the airline was fine-tuning its strategies to curtail operating costs to reap the profits in the ensuing fiscal.