Air India to add 15 more Airbus A320s to boost capacity
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Mumbai: India’s oldest airline Air India Ltd will take 15 more narrow body Airbus SAS made A320 planes on lease to augment capacity as its private rivals are taking delivery of more planes scaling up the competition.
This in addition to Air India’s latest addition of five such planes and its plan to lease 14 Airbus A320neos, a fuel efficient variant that can give 15% savings on fuel compared to existing A320 planes.
“We are planning to come out with a (global) tender to add 15 more A320 aircraft to cater to the growing market, as approved by the board in the meeting held on 29 October, 2015,” said S. Venkat, director (finance) at Air India on Saturday.
Venkat was talking on the sidelines of 111th birth anniversary celebration of JRD Tata here.
He said Air India recently added five new A320 aircraft from an international leasing company.
Air India will add six more Dreamliner planes or B787s in the fleet in 2016-17.
Air India has 21 such widebodied planes at present.
“We are in the process of inducting 14 A320neo aircraft on lease basis in 2017-18. Our subsidiary, Air India Express (international low fare airline) is inducting six Boeing B737-800 aircraft in their fleet in 2016,” Venkat said.
He said Air India has retained its initial option of inducting three Boeing B777 ER (extra range) in its fleet which are proposed to be delivered in the year 2016-17 and 2017-18.
The total fleet strength of Air India and subsidiaries today stands at 135 which is one of the largest in the sub-continent.
Air India’s rivals Jet Airways (India) Ltd, Vistara (run by Tata SIA Airlines Ltd), IndiGo (run by InterGlobe Aviation Ltd), GoAir (Go Airlines (India) Ltd) and SpiceJet Ltd are taking more airplanes as the demand of air travel has picked up in the country.
“Air India is doing its best to add capacity. But this scattered approach may not help Air India. It is not able to cover costs on most of its routes,” said an airline consultant, requesting anonymity.
He said it will have to face stiff competition with rivals. For instance, one of the smallest airlines GoAir has some 72 Airbus A320neos on order, he cited.
Venkat begs to differ.
“Nearly 87% of our routes today cover our variable costs of operation,” he said adding Air India has got the youngest fleet with an average age of 6 years hinting towards fuel efficiency of planes.
A total of 102 new aircraft have been inducted during the last eight years which comprised both narrow and wide bodied fleet, Venkat said.
He said Air India’s consolidated revenue is expected to be Rs25,000 crore on a consolidated basis in 2015-16.
The national flag carrier is surviving on a Rs30,000 crore government bailout. The firm, with a total debt of Rs40,000 crore as on 31 March, is expected to turn around only by 2018-19.
In June, the aviation ministry asked SBI Capital Markets Ltd to review the turnaround plan of the loss-making airline in the backdrop of changes in the operating environment and increased competition.
Air India is expected to post a loss of Rs3,900 crore for the year ended 31 March 2014, numbers for which are yet to be disclosed. It posted a loss of Rs5,100 crore in 2012-13 and a loss of Rs7,100 crore in the preceding fiscal.
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