National carrier Air India is likely to report better revenues for FY16 on the back of better operational parameters. This year, the airline will do the forward sales accounting for passenger, cargo and chartered revenues for the year FY14-15 which may boost the topline, according to a senior official.
Though the airline has so far not declared its FY16 earnings, it is expected that its total revenues during the year will be Rs 15,600 crore, which will be similar to a year before. However, with the forward sales accounting, the revenues are expected to increase but by how much is not clear as the final accounting is still not over.
When a passenger cancels a ticket, a part of the cancellation fee goes to the airlines, which will be taken into account in the forward sales accounting process. The same procedure is repeated for cargo and chartered services.
“The forward sales accounting for FY14-15 will take place this year, which will increase the revenues. We are yet to get the final numbers. Initially, we thought the topline will be flat. This will also increase the expected operational profit,” added the official.
The other reason for an increase in the topline is the increase in the passenger load factor. In FY16, the combined load factor of the full service carrier increased to 75.7% as opposed to 74.3% in FY15. According to the official, every 100-bps increase in the network or combine PLF adds almost Rs 200 crore in revenue.
Also, due to the introduction of flights on routes like Delhi-San Francisco, the utilisation of aircraft like the Boeing 777 LR has improved to 14.07 hours, as opposed to just three hours prior to that which will also help increase the revenue.
“We were expecting to report an operating profit of around Rs 8 crore but it may increase due to the improvement in operational standards and inclusion of forward sales accounting of FY 14-15 this year,” the official said.