The Hindu Business Line : Indian's route to higher profit

State-owned carrier Indian has posted a net profit of Rs 65.61 crore in 2004-05, up from Rs 44.17 crore the previous year. The airlines' latest annual report that was tabled in Parliament this week shows that the airline carried more than 71.31 lakh revenue passengers, up from a little more than 59 lakh revenue passengers carried during the previous year.

The data show that Indian carried more than 54.32 lakh domestic revenue passengers in the domestic skies and more than 16.98 lakh international revenue passengers, bettering its own performance of the previous year (when it had carried 42.78 lakh and 16.21 lakh passengers respectively).

This is the third time in the past decade that the airline's revenue passenger has touched or surpassed the seven-million mark during a year.

Wide reach

In 1995-96, the airline had carried more than 7.7 million passengers, including 6.9 million domestic passengers. The following year, it carried close to 7.1 million passengers. The airline has a wide network connecting 58 domestic stations, apart from operating regular flights to several international destinations in Sri Lanka, Singapore, Thailand, Malaysia, United Arab Emirates, Kuwait.

New routes, schemes

During the year, Indian launched several routes, including a twice-a-week service on the Guwahati-Bangkok sector, a daily flight on the Delhi-Kuala Lumpur and Mumbai-Bangkok sectors.

Besides, the airline also adopted a number of initiatives to stimulate the market, including the concept of positioning fares.

These fares, which were almost at a par with those charged by the Indian Railways for travel by air-conditioned chair car, were introduced on certain select sectors.

In addition, two more promotional schemes — fly select fares and easy fares — were also introduced. While the former were lower than normal published fares and were available at two levels for limited seats on a first-come first-serve basis, the latter were lower than the normal published fares and available on a maximum of four levels on the rupee fare charged by the airline.

The airline also reported an increase in the mail carried by it that touched 11,887 tonnes in 2004-05, up from 10,525 tonnes carried during the previous year. However, the sharp northward movement in the price of aviation turbine fuel (ATF) also affected the airline and saw its aircraft fuel and oil bill rise to Rs 1,490 crore during 2004-05 from Rs 1,039 crore the previous year.

Market-share

The annual report shows that, of the 81 domestic services operated in 2004-05, 32 met the total cost of operations while a similar number met the direct cash cost of operation.

However, there were 17 services operated by Indian that did not meet the direct cash cost of operations. The airline operated 51 services in the international sector, of which 11 met the total cost of operations, 24 the direct cash cost of operations, while 16 services did not meet the direct cash cost of operations.

There was a marginal reduction in the airline workforce in 2004-05 that stood at 18,504 down from 18,715 employees during the previous year. The airline is now taking a number of steps to increase its market share.

The proposed induction of the first of the 43 Airbus aircraft to be acquired later this year, should help the airline add more frequencies.

In addition, Indian recently invited tenders for leasing wide-body aircraft that should help it expand its network in the international arena.

The airline is also taking steps to offer more in-flight facilities. Hopefully, all these measures should help it increase its profitability in the coming years also.

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