AirAsia India posts Rs 29-cr loss on low passenger load factor

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Mumbai | Updated: November 26, 2014 10:36:03 AM

No-frills airline AirAsia India posted a loss of around R29 crore for the July-September quarter...

The Malaysian company didn't reveal the revenues earned by AirAsia India. ReutersThe Malaysian company didn’t reveal the revenues earned by AirAsia India. Reuters

No-frills airline AirAsia India posted a loss of around Rs 29 crore for the July-September quarter, its first full quarter of operations since its launch in June.

The disclosure was made by Malaysian airline AirAsia Bhd in its September quarter earnings report, which was issued on November 19. AirAsia Bhd is promoted by entrepreneur Tony Fernandes — who owns a 49% stake in the Indian carrier. Tata Sons and entrepreneur Amit Bhatia are the other stakeholders in the Indian venture.

The Malaysian company didn’t reveal the revenues earned by AirAsia India.

The Malaysian airline said that its subsidiary AirAsia India is planning to create a second hub in Goa and will add more aircraft to its fleet. “In India, they (AirAsia India) will likely add two more aircraft in December, bringing it to a total of four aircraft,” it said.

In June, just before the low-cost carrier started operations in India, Fernandes had said that AirAsia India would break-even and start posting profits from September onwards by minimising costs and carrying more passengers. Now, it remains to be seen whether the carrier will post a profit in the December quarter.

The losses can be partially attributed to a low load factor, which in turn leads to higher losses per passenger.

The passenger load factor  recorded by AirAsia India has fallen sharply since June.

Data available with the Directorate General of Civil Aviation shows that AirAsia India’s load factor, which stood at 80% in June, fell to 69.8% in July, 73% in August, 68.7% in September and 76.2% in October.

In the June-October period, AirAsia India’s competitors —IndiGo and SpiceJet — maintained a load factor of over 75%.

An AirAsia India spokesperson declined to comment on the financials.

AirAsia Bhd is optimistic about the future growth of its Indian subsidiary, as it expands operations. The airline plans to fly to Delhi and Mumbai shortly.

Analysts state that AirAsia India’s financial performance was in line with expectations. “Given the hyper competition, with structural overcapacity and an adverse cost structure, it will be a major surprise if any of the existing airlines make a huge profit in the near future,” said Deep Narayan Mukherjee, senior director at India Ratings and Research.

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