Air India Express, the low-cost airline of Tata Group’s Air India, has posted a net loss of Rs 163 crore in 2023-24 (FY24)—quite the contrast from the Rs 117 crore profit it enjoyed just a year earlier. This nosedive stands out as it is only the second time in the past nine years that the airline has found itself in the red.
While the company’s total income increased by 33 per cent year-on-year (Y-o-Y) to Rs 7,600 crore in FY24, its total expenditure grew by 38.3 per cent to Rs 7,763 crore in the same period, according to documents submitted to the Registrar of Companies (RoC), reviewed by Business Standard.
According to airline sources, the primary reason for the losses in FY24 was the airline’s substantial expansion, particularly in the domestic market, which brought it into competition with market leader IndiGo on various routes. This led Air India Express to align its fares with IndiGo’s lower pricing on those routes, affecting profitability. Additionally, aircraft maintenance and the hiring of new employees increased overall expenses.
Before Tata Group took over Air India and Air India Express in January 2022, more than 90 per cent of Air India Express’s flights were on international routes.
In its RoC documents, Air India Express stated: “During FY24, Air India Express inducted 22 aircraft on dry lease in the fleet, namely 17 B737-8 Max and four A320 Neo and one A320 Ceo (from AIX Connect), taking the total count of aircraft in the fleet from 26 to 48.”
AIX Connect, Air India’s other low-cost airline, is in the final stages of being merged into Air India Express to create a single low-cost airline subsidiary to Air India. AIX Connect itself incurred a significant net loss of Rs 1,149 crore in FY24. However, it was lower than its FY23 net loss of Rs 2,750 crore.
In FY24, Air India Express commenced significant domestic operations, primarily with the new B737-8 Max aircraft, it stated in documents. “Ten new domestic stations were added during the year. Further, a number of new domestic and international routes were also introduced during the year. By the end of the year, AIXL network had 29 domestic and 14 international stations,” it added.
Just four per cent of Air India Express’s flights were operating on domestic routes in March 2023. Within a single year, the share of domestic flights has increased to 44 per cent, according to aviation analytics firm Cirium. Air India Express operated 1,313 flights per week in March 2024.
As its fleet almost doubled, Air India Express’s aircraft repair and maintenance expenses jumped by a staggering 80.57 per cent Y-o-Y to Rs 1,004 crore. Its “employee benefit expenses” also more than doubled to Rs 772 crore in FY24.
The Tata Group wants to merge AIX Connect into Air India Express to create a single low-cost subsidiary by October 1. Vistara— which is a 51:49 joint venture of the Tata Group and Singapore Airlines— is in the process of being merged into Air India to create a single full-service airline by November 12.
On Friday, Air India Express announced that Hamish Maxwell— who currently holds the position of Senior Vice President (Flight Operations) at Vistara— will step in as its new Chief Operations Officer (COO) from October 31. Pushpinder Singh, the current COO at Air India Express, will head back to Air India on October 31.
First Published: Sep 06 2024 | 6:57 PM IST