Even though India’s regional international airline Air India Express was part of the loss-making carrier Air India, it had always prided itself on being a profitable enterprise. AI Express maintained a healthy balance sheet for years by operating profitable routes efficiently and keeping costs under check. However, the COVID pandemic halted that winning streak, and the airline reported its first loss in 7 years.
Air India Express submitted its financial report to the Registrar of Companies recently, which revealed that the airline suffered its first loss in seven years. In FY22, AI Express posted a net loss of around $8.9 million against a net profit of around $12 million last year.
This is the first time since 2015 that the carrier has been in the red when it posted a net loss of $7.5 million. The airline explained in its report that the second and the third wave of the pandemic impeded market recovery, particularly in the regional international markets, which are the primary source of revenue for AI Express. It further stated,
“Going forward, as market recovery picks up pace, the airline’s immediate efforts will be to focus on operational and financial stability, and a return to normalcy. This will include building up resources for increasing flying (hours), increasing average aircraft utilization to pre-pandemic levels, and evaluating a moderate capacity increase.”
It could have been worse
Like the rest of the world, India, too, placed border restrictions to curb the spread of the COVID virus during the pandemic’s peak. While domestic travel gradually recovered, international flights remained restricted until March this year.
Air India Express primarily provides international services, connecting Indian cities with several popular regional destinations, including Dubai, Muscat, Doha, Bahrain, Singapore, and Kuala Lumpur.
AI Express’ business was affected due to the COVID pandemic. Photo: Akshay Mantri
But the airline explained that it continued with its business continuity measures, by shifting capacity in alignment with demand patterns, keeping a close watch on route profitability, continuing with cutbacks in employee salaries, and focusing on cargo.
As such, it was able to contain its losses to what it is now and prevent further dents into its finances. AI Express said that its passenger load factor of 59.9% in FY22 has been “notable” as many flights had to operate with only one-way/restricted passenger loads due to travel restrictions by many countries during the COVID wave.
The road ahead
However, there’s hope that AI Express won’t have to suffer for long as several developments have taken place in the last few months after the Tata Group took over the airline.
In June, it was reported that the new owners are planning to invest between $75 to $100 million in the airline over the next five years, most of which will go towards adding more aircraft for the planned network expansion.
AI Express is looking to add many destinations in the future and is exploring countries such as Cambodia, China, Indonesia, the Philippines, Turkey, and Vietnam.
With air travel bouncing back and several new plans in the pipeline, hopefully, Air India Express will be nursed back into health soon.
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Source: Business Standard