Air India Express, which operates about 175 flights a week, has 17 Boeing 737-800 aircraft in its fleet.
For the first time in a decade of its existence, Air India Express, the fully-owned low-cost subsidiary of national carrier Air India, is slated to report a profit for financial year 2014-15.
The Kochi-headquartered airline, which flies to Middle-East and south-east Asian destinations, is slated to post a profit of Rs 100 crore for 2014-15, against a loss of Rs 300 crore it reported in the same period of the previous year, senior Air India officials told FE.
The officials, however, didn’t reveal the top line or other financial parameters from the airline’s profit and loss statement for the recently concluded fiscal.
The financial results for 2014-15 of the national carrier and its subsidiaries are currently being audited by the airline.
“Air India Express has been able to post a profit during FY 2015 as it was able to garner higher revenues. Besides that, lower jet fuel prices along with an efficient management at the airline has helped it to enter profitability after posting losses for nearly a decade,” a senior Air India executive said.
The jet fuel prices, which contribute to as much as 40-60% of the airline’s total expenses, have fallen by 23% in 12 months.
As of June 1, jet fuel price stood at Rs 53353.92 per kilolitre at the Delhi airport, incidentally the busiest in the country.
Air India Express, which operates about 175 flights a week, has 17 Boeing 737-800 aircraft in its fleet. It plans to lease five more such aircraft from GE Capital Aviation Services, with an option to lease two more, which are set to be inducted into the airline’s fleet by 2016. “The airline wants to have a fleet of 35 aircraft by 2020 and will add new routes to its schedule. Most of these aircraft will be leased. At present, the management of the airline is discussing the new routes, some of which will be implemented as early as 2016,” the senior AI executive said.
Air India Express, which started off as a low-cost carrier connecting South India with the Gulf region, began operations on April 29, 2005, with a flight from Thiruvananthapuram to Abu Dhabi. The carrier currently flies to other Asian destinations across the Middle East and Far East from Kochi, Kozhikode, Mumbai, Goa, Lucknow, Bangalore, Jaipur, Chennai, Bangalore and Amritsar.
“The idea is to connect destinations in the Middle East and South East Asia which are not currently well connected.
It should also make business sense for us to operate on these routes. At present, several names like Tashkent (Uzbekistan) and others have been floated, however the final decision is yet to be made,” said a senior Air India Express official.
“Operationally, Air India Express has been able to achieve over 85% load factor during 2014-15 and its aircraft flies 11-12 hours a day. The airline earned average revenue of about Rs 8 crore a day in this period. We are confident that going ahead, the airline will be hugely profitable. For FY 2016, according to internal estimates, Air India Express is expected to report a profit of Rs 170 crore,” the senior Air India Express official added.