State-run carrier Air India plans to further consolidated its low-cost arm, Air India Express in the international sector and then enter the domestic low-cost airline market.
As a part of its revival plan, the airline was contemplating to launch a domestic low cost service by the middle of September, but now it plans to first expand its base in international sectors and then gradually shift its operations in the domestic low cost market space.
“These days fares on the domestic sectors are low. So we have decided to further expand operations of Air India Express on international sectors as cost of fuel for international operations significantly lower than what is charged for domestic operations,”a senior official with the airline told the Hindustan Times on conditions of anonymity.
The official said while a kilolitre (KL) of fuel for domestic operations costs Rs 37,000 per k/L (ex Delhi) whereas for international operations fuel costs approximately Rs 30,000 per k/L as it is considered deemed exports.
“It makes sense for us to expand operations of Air India Express further because given the low fuel prices for international operations it makes it more profitable for us to operate on international sectors at lower fares,” the official said.
Air India Express has a fleet of 39 aircraft now with two more to join by end of this year. It is also planning to convert 10 of its Airbus A320s or Boeing 737s into all economy class-configuration. This would mean that the airline would have 168 seats per aircraft instead of 144 seats that are there in a full service aircraft.
“With more seats per aircraft and low cost of fuel, Air India Express will have a cost advantage,” the official added.