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Fuel cost, low demand on Gulf routes clip Air India Express’ wings

V Sajeev Kumar Kochi | Updated on February 21, 2018 Published on February 21, 2018

Profit exceeds this year’s target, falls short of last year’s

Rising fuel cost and slackening demand on the Gulf routes seem to have made a dent on the profit of Air India Express, the low-cost arm of Air India.

The net profit in the current fiscal is expected to fall short of last year, even though the airline company surpassed the budgeted target of ₹208 crore and clocked ₹231 crore in the first nine months ended December 2017. In FY17, the net profit was ₹297 crore.

According to K Shyam Sundar, CEO, Air India Express, the profit may be ₹225-250 crore by this fiscal end, as February and March are considered lean months.

A marginally better occupancy rate of 78 per cent reflected an increase in passenger traffic at 4 million compared with 3.4 million last year. The cargo revenue also doubled in the last three years, which would touch ₹65 crore.

“We have done exceedingly well in the face of a lull in demand and capacity infusion by others. Almost 90 per cent of our revenue comes from GCC and that market is not exactly buoyant,” he told a select media group.

AIE, he said, has concluded the arrangements for the leasing of two additional Boeing 737-800 NG aircraft, which are scheduled to be inducted on dry lease in September and October. With this, the number of aircraft will go up to 25.

The company is also betting big on the upcoming Kannur airport to improve the performance further. It has also finalised the deal to change seats and carpets in aircraft; the process will be done from April to September. Zodiac, one of the top manufacturers of airline seats for Boeing has been entrusted with the task.

Expansion

The company is set to further expand its operations in the summer 2018 schedule, which will commence on March 25, by enhancing the weekly departures to 586 from the current 561. The increase in operations will be achieved through increase in aircraft utilisation, which is poised to go up from about 12.8 hours currently to 13.5 hours per day per aircraft in the summer schedule, he said.

The major improvements in the summer schedule are: launching of direct thrice-weekly flights from Kochi to Singapore via Madurai; introduction of direct flights from Kochi to Kuwait/Dammam; daily flights with improved timings on Kochi-Doha-Kochi; improvement in the schedule of operations on Thiruvananthapuram-Kozhikode-Doha and return sectors.

Published on February 21, 2018
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