Air India looks at leasing more aircraft to add tailwind to frequency

Among narrow-body aircraft, airline will lease 29 Airbus A320 while phasing out 14 from its fleet

This year, Air India (AI) will look at leasing around 34 aircraft to mount more flights on international destinations and increase frequency in domestic routes. It is looking at both narrow- and wide-body aircraft for this. 

Among narrow-body aircraft, the airline will lease 29 Airbus A320 while phasing out 14 from its fleet. The airline is also looking at leasing five Boeing 777s, which will be deployed in new international destinations, and increasing flights in the existing routes. 

“We are looking at more planes, we want to launch new flights. If the fuel price remains where it is now, we will definitely see economics of scale,” AI Commercial Director Pankaj Srivastava said.

According to him, the aircraft in order will be delivered over two years. Among the new international destinations, the airline will launch flight to are Washington, Copenhagen and Toronto. It will also increase frequency on routes to Melbourne and Sydney, besides short-haul ones like Colombo, Kathmandu, Singapore and Bangkok.

Chairman and Managing Director Ashwani Lohani has been very bullish about launching new routes despite the balance sheet coming under pressure. 

The airline had earlier written to the Centre about the expansion plan, saying that if there was a lack of capital infusion, the turnaround plan of the airline may falter as a consequence. 

As a part of the bailout package for the airline, the government has decided to infuse Rs 1,800 crore in  FY18 against a demand of Rs 2,844 crore by the airline.

Srivastava said the airline was looking at various option to cut debt, including asking lenders to convert a portion of the working capital loan into equity. This will see a change in the management structure of Air India as lessors will want some control. “Definitely, if this formula works out, there will be a change, the lenders will want their person in the management,” Srivastava said. 

The airline’s debt book stood at Rs 46,000 crore at the end of 2015-16 after it was able to reduce it by around Rs 5,000 crore from Rs 51,637 crore in 2014-15. 

It earned Rs 21,244 crore in the past financial year which means a large part of its revenue goes into debt servicing, leaving little for operational expense. 

Lohani had earlier said if the debt was removed from the books of Air India, it could immediately move towards profitability.

However, experts say unless privatised, there is little hope of any turnaround for the airline. 

“I don’t see any turnaround for Air India under any form of government ownership,” said Kapil Kaul, chief executive, South Asia of aviation consultancy firm CAPA. 

Airline’s Journey

• Among narrow body aircraft, the airline will lease 29 Airbus A320 while phasing out 14
• The airline is also looking at leasing five Boeing 777s which will be deployed in new international destinations and increasing flights in the existing routes
• Among the new international destinations, the airline will launch flight to are Washington, Copenhagen, Toronto
• It will also increase frequency in routes like Melbourne and Sydney besides increasing frequency in short-haul routes like Colombo, Kathmandu, Singapore, Bangkok