For the international low-cost subsidiary of Air India, 2016-17 is going to be a critical year for consolidation. Backed by a profit of Rs. 179 crore last year (a further surge in the bottomline, will mean profits touching Rs. 200 crore, expected at the end of the current fiscal) and a major capacity addition by the end of the summer schedule this year, Air India Express is poised to attain new scales both in terms of adding new routes as well as frequency on its existing network. The icing on the cake is: India’s first low cost international carrier (in existence since 2005) which is primarily known for providing robust connectivity between destinations down South and the Gulf countries will also commence operations from India’s capital Delhi, while also adding to its presence in Mumbai market. Conventional wisdom that Air India Express’ strategy does not include building a base in the dynamic metro markets, therefore, is bound to change.
“2016 is going to be a very critical year for us. We are looking at 40 percent increase in capacity and 30-35 percent increase in revenue,” K Shyam Sundar, CEO, Air India Express told TourismFirst in a recent exclusive interview. Significant capacity addition will be provided with six new Boeing 737 aircrafts which are being taken on lease. The induction process of these aircrafts will begin from March and before the end of the summer schedule, all six of them will be part of the airline fleet taking its total fleet count to 23 as against existing 17. “As you can see, the capacity addition which is going to happen over next few months will provide us the scope to spread our wings significantly both in terms of touching new destinations and also in increasing frequency on routes which are doing well for us,” Sundar said.
This is how the induction of new aircrafts between March and November end is likely to change the operational scale of Air India Express. To begin with, the frequency of Air India Express flights from South Indian destinations (60 percent of its market) to the Middle-east will see a significant increase – 119 weekly flights by the end of November from the present base of 96. It also provides the airline the opportunity to strengthen its most profitable market, Kozhikode, a bit more with an increase in seats to 11718 seats per week from the present 8184 seats. The airline has planned to increase frequencies between Kozhikode and Dubai to two flights per day from the present daily flight. Air India Express will also introduce daily two separate non-stop services between Kozhikode and Bahrain and Doha in the new schedule. Ras Al Khaimah is being introduced as a new destination with a frequency of 4 flights per week from Kozhikode. The services to Kuwait from Kozhikode will also jump from thrice a week to 5 flights per week.
Non-stop Dammam flights from Kochi is another major attraction of the new schedule. Frequency of flights between Thiruvananthapuram and Dubai will also increase and the seats offered will become 1116 from the present 930 seats in a week. In a cumulative operational sense, the airline is targeting to expand its reach globally reaching out to new destinations in West Asia. At the same time, it is seeking to emerge as a much stronger international player in the north Indian market. “In terms of new international destinations, we are eyeing to bring Ras al-Khaimah, Tehran, Tashkent and Almaty on our global network by 2016-17 end. In terms of city pairs, we are looking at a direct link between Dubai- Chandigarh, Dubai-Madurai, and increase our frequency on Dubai -Jaipur and Sharjah-Varanasi routes. We have a base and we can certainly enhance our presence in these sectors,” Sundar pointed out.
According to Air India Express CEO, the decision to commence services from Delhi will significantly add to the carrier’s profile as it also provides the opportunity to open new routes like Iran. “We will start operating from Delhi from mid-May. Initially we will connect Dubai and Sharjah. We are also eyeing a service on Delhi-Tehran route. We are currently involved in the preparatory work to open this route,” he said. But prior to services originating from Delhi, the airline will be initiating two services from India’s financial capital – on Mumbai- Dubai and Mumbai- Sharjah routes.
Product refinement will be a simultaneous pursuit; paid meals and wi-fi services in the offing
While the induction of half a dozen new aircrafts will give leeway to Air India Express to stretch its wings significantly, according to the airline CEO, a simultaneous initiative is also being set afoot to enhance the experiential quotient of travellers who are flying with it. “We have drawn out a plan for product refinement as we fully understand that travellers flying with us have to be provided with more in-flight options,” Sundar said.
As part of this plan, the airline is all set to offer paid meal options. Air India Express is the only low cost international carrier which is providing free meals on board but it is adding new items to its menu list for which the traveller will have to pay. “Currently we are offering standard free meals. But we have got requests from customers who are willing to pay if we offer them variety in meals on board. So we are going to implement an online scheme wherein a passenger with his ticket can also book a meal of his choicwe,” Sundar informed. He was, however, quick to clarify that this would not result in completely doing away with free meals offered on board. “Our new food scheme will be only for those who opt for meal from the new menu.”
Another critical offering in the near run for Air India Express travellers could be wi-fi connectivity on board. “ The new aircrafts which we are getting on lease will have wi-fi options. We are working out the economics of it and negotiating the cost issues with the service providers. Once we are sure that it will at least meet the cost of providing the service, we will add it to our offerings list,” he said while adding that Air India Express will also come out with a dedicated mobile application.
Consultants to advise South East Asia expansion
With the fortune of the economies in the Middle East going down following the significant drop in oil prices (the backbone of most of the economies in the region) since late 2014, observers in the Indian aviation sector are pointing out that if the scenario extenuates, it could pose a serious problem for Air India Express. And the solution, therefore, for it is to start paying attention to other medium haul regions like South East Asia where it can conveniently operate. The airline alreadyoperates to Singapore and Kuala Lumpur.
“Similar apprehensions were expressed in 2009 following the financial crisis which had affected the Middle-east economies. Let’s see how the situation pans out this time. We are keen to develop new regions as a stronghold in the medium to long-run. That process may happen after the further growth in our fleet,” responded Air India Express CEO. As per the planned fleet expansion plan of the carrier, it will become a 36 aircraft carrier by 2018. “This will be a critical milestone for us. As we inch closer to this fleet size, we will look for new destinations in South-east Asia. At some stage in the near run, we will engage network experts to suggest us the options of new destinations in the South East Asian markets. It is certainly on our radar but it will take sometime,” informed he.
