Air India sees operational profit of Rs 1000 cr per year with new international flights
In 2017-18, the airline had earned a revenue of Rs 23,000 crore but a year later, it incurred a loss of about Rs 4,000 crore, adding to the Rs 50,000 crore debt it already had.Updated: Jun 15, 2019 16:38 IST
Loss-making national carrier Air India expects to earn an operational profit of at least Rs 1,000 crore per year with more frequent flights to the US and Australia as well as direct flights to Bali, Toronto and Nairobi that the airline will launch in October, a senior official of the airline said on the condition of anonymity.
In 2017-18, the airline had earned a revenue of Rs 23,000 crore but a year later, it incurred a loss of about Rs 4,000 crore, adding to the Rs 50,000 crore debt it already had.
“In 2018-19, our revenue was Rs 25,000 crore but the expenses range around Rs 29,000 crore. We have increased the target for 2019-20 to Rs 31,000 and since the expense is expected to be same, we can manage operational profit of around Rs 1000 crore. However, a lot depend on the opening of Pakistan airspace,” said the AI official.
The closure of airspace by Pakistan in the wake of the February 26 Balakot airstrikes by Indian Air Force has cost Air India dear. Since then, the airline has been spending Rs 6 crore a day for the extra distance that its flights to the US and Europe have to cover because of the restrictions.
“We are largely banking on new direct flights which we will be launching this year. No other airline offers direct connectivity and we hope to attract passengers on these new flights,” the official added.
Announcing the new direct flight to Toronto, Aviation minister Hardeep Puri tweeted- “I am glad I was able to help in fulfilling this long pending demand of citizens of Guru Nagri & devotees who travel from North Americas to pay obeisance at Sri Harmandir Sahib, Durgiyana Mandir & other holy places. This flight will mark an auspicious beginning of a new journey.’’
With more than 80% of the seats going full, Air India is hopeful to increase the load factor to 90%. But new direct flights aren’t the only new strategy. The next step is to tackle the grounded 20 planes including both Boeing and Airbus fleet.
The aircraft were grounded because of lack of spare parts as the debt-ridden airline could not afford to buy engines. But funds have been released to the engineering division and 30 new engines are being procured.
“It’s a good move, because after Jet closure, a lot of international capacity is created. But to make flight economically viable, it is important for the flights to be backed by proper marketing strategy. So that passengers are attracted to airline not because of low fare but because of the product you are offering,” said Jitender Bhargava, former executive director, Air India.
He said that Air India used to operate Toronto and Nairobi direct flights earlier too, but services were shut down in 2010 because of lack of traffic.