AI to increase revenue from ads, baggage

With earnings from ticket sales under pressure, cash-strapped Air India (AI) is tapping every opportunity to generate revenue, including advertisement and excess baggage.

The state-owned carrier has also plans to appoint consultants to unlock the value of its real estate properties. It has offices both in India and abroad. This includes the iconic 22-storey Air India building in Nariman Point. The ailing airline estimates it can earn up to Rs 5,000 crore by monetising its real estate assets.

“Our focus has always been on carrying passengers, but now, we are looking at other revenue possibilities. Besides monetisation of properties, we are looking at revenue from advertisements on boarding passes, baggage tags and on inflight entertainment channels, and fees from excess baggage,’’ said a senior airline executive.

AI is awaiting the government’s approval for unlocking the value of some of its real estate assets. “Monetisation of real estate assets is a part of turnaround plan. A decision will be taken following the government’s approval,’’ another executive said.

AI has invited bids for printing of boarding passes with advertisements on the back. “The cost of printing boarding passes will be absorbed by the vendor. We hope to realise Rs 10 crore from this,’’ the executive said. It also plans to allow advertisements on movies and music channels in its inflight entertainment system.

“Chairman Rohit Nandan has instructed all airport managers to focus on increasing revenue from excess baggage. Currently, it makes up only one per cent of total passenger revenue and Nandan has set a target of three per cent,’’ the executive said. Last year, AI earned Rs 11,000 crore in passenger revenue and excess baggage made up an extra Rs 100 crore.

“In the US, airlines charge passengers for every baggage carried. Baggage has become an important source of revenue for airlines, as the possibility of increasing fares is difficult. We, too, need to look at increasing revenue from baggage,’’ he said.

In India, there is no consensus among airlines to do away with free baggage allowance. Passengers are also expected to protest any such move.

AI is awaiting the government’s approval for financial restructuring. Last year, it reported Rs 7,000 crore in losses and had Rs 40,000 crore in debt. The airline hopes to induct the first of its Boeing 787 Dreamliner plane by December.

“We plan to increase the utilisation of our Boeing 777s and airbus A320 planes by adding new flights. We are introducing new flights to Kuala Lumpur from Delhi and Chennai. Passenger loads have gone up and we plan to increase revenue by another Rs 1,200 crore by introducing upgrade vouchers and loyalty programmes,’’ he said.