AirAsia India to double revenue, traffic this year

However, profitability to remain under pressure due to the investment in building of capacity

AirAsia India says it expects to double the annual revenue in the coming financial year, 2017-18. 

However, profitability will remain under pressure as it invests in new planes, routes and hiring of more people, said chief executive Amar Abrol.

Revenue was Rs 658.8 crore in 2015-16. The airline, joint venture of Tata Sons and Malaysia’s AirAsia, has eight aircraft and will add six more this calendar year. The aim is 20 by the winter schedule of 2018, the qualification for applying to ply abroad. Which is when we will get to international operations, said Abrol.

The airline expects to increase passenger numbers to 4.8 million in 2017-18, from 2.4 mn now. Abrol said it was being helped by feed from Malaysia and Thailand, where AirAsia Bhd (the parent) has strong hubs. "We have a fly-through product which allows passengers to travel, for example, from Kuala Lumpur to Srinagar via Delhi We are building on that," he said.

It will hire as it increases operations. The airline recently took on 10 foreign pilots and will have personnel of 1,731 by the end of 2017-18, from 1,021 currently.

However, profitability will remain under pressure as its gestation cost increases due to capacity addition and hiring more.

"This is a year of investment for us, as we get more aircraft and launch new routes. Definitely, there will be a gestation period for this," said Abrol.

Adding: “First, we will look to attain gross profit. Then, be profitable in cash flow terms and finally clock net profit." The loss in 2015-16 was Rs 181.7 crore.

“AirAsia India needs a large capital infusion to pursue such an aggressive expansion strategy," said Kapil Kaul, chief executive, South Asia, at aviation consultancy CAPA.

Abrol said they were sufficiently funded and the shareholders were open to investing more when there was a requirement.