Airline News
New resolve at Air India
September 23rd 2014
State-owned Air India has said it plans to cut the number of unprofitable routes to 19% of its overall network at the end of the current financial year, after reducing the number from 38% at the end of FY2013-14 and 60% two years ago, reports India’s Business Standard. Read More »
“We have completely withdrawn flights not meeting ATF (aviation turbine fuel) costs. While there would be flights in which we would not be able to generate operational profits, we are looking at meeting cash costs on 81% of our network by the end of this financial year,” a senior official at the airline said.
Air India has singled out 19 loss-making routes, six of which are international. The domestic ones include Mumbai-Kolkata and Delhi-Bangalore; the international ones include Delhi-Sydney and Delhi-Milan.
Chairman and managing director Rohit Nandan has said he is monitoring the route economics daily.
Earlier this month, the flag carrier sold five Boeing B777-200LRs to Etihad Airways for $67.3 million each after having bought them for an average $127 million a plane seven years ago.
Vinod Rai, a former comptroller and auditor general at Air India, has recently made the headlines when he revealed in an interview with The Times of India the thereto unknown embarrassing truth about the carrier’s Boeing long-range jet order in 2004.
Rai said the original order for the aircraft was the brainchild of then civil aviation minister Praful Patel, who wanted the airline to have direct flights from India to the U.S. and Canada. The upshot of this was virtually crippling for Air India.
"When any purchase has a debt proportion of 97%, there's no way it can be commercially profitable,” Rai offered.
The Indian aviation sector is undergoing rapid transformation. Revitalized private carrier Jet Airways is gaining renewed traction after an equity stake investment from Etihad Airways, while Vistara is planning to start operations later this year with a full-service concept in collaboration with part-owner Singapore Airlines.
