Losses at AirAsia India, the joint venture between Tata Sons and Malaysia’s AirAsia Berhad, widened five fold to Rs 670 crore in 2018-19 because of high fuel costs, weak rupee and competitive fares. The airline had reported a loss of Rs 125 crore in FY18, according to the data available with the Ministry of Corporate Affairs.
AirAsia India’s peers also posted weak results in FY19 amid a tough operating environment. While profits at IndiGo dipped 93% Y-o-Y to Rs 156 crore in FY19, SpiceJet posted Rs 316-crore loss for the year ended March 31, against a Rs 566-crore profit a year ago.
Tata Sons’ other joint venture carrier Vistara nearly doubled its losses to Rs 831 crore in FY19.
The domestic carriers are expected to considerably improve their financials in the current fiscal on account of grounding of Jet Airways in April 2019.
AirAsia India had reported losses of Rs 181 crore and Rs 140 crore in FY16 & FY17, respectively. The budget carrier, which started operations in 2014, has accumulated losses of Rs 1,284 crore at the end of March 2019.
AirAisa India operating revenues shot up 39.5% y-o-y to Rs 2,511 crore on account of 46.3% more passengers in FY19, while its other expenses, which included aviation turbine fuel costs, jumped 70% y-o-y to Rs 2,830 crore.
While ATF prices were up 23% y-o-y in FY19, the rupee depreciated 6.3% against the US dollar, increasing costs for domestic carriers.
AirAsia India currently has a fleet of 23 aircraft and is awaiting the government’s approval for international operations. Though the Bengaluru-based carrier became eligible to fly overseas routes in January 2019, its requisite permission is held up due to alleged violations of foreign direct investment norms.
Aviation consultancy firm CAPA India expects AirAsia India to break even in FY20.
“AirAsia India is developing greater clarity on its strategic direction and is now accelerating its expansion. It could double in size by the end of FY20.
Changed market conditions provide AirAsia India with a chance to catch up for its pedestrian rate of expansion since it launched. The airline will add as many aircraft this year as it did in its first five years of operations,” CAPA India noted.