The skies have not been an easy place for Indian airlines. Apart from IndiGo, almost every carrier has run into turbulence, and piled up debt on its books. Which is why when Rohit Nandan, the CMD of Air India, talked about turning cash positive in 2018 during the recent Star Alliance Chief Executive Board Meeting press conference, the statement was met with incredulous silence.
Air India's optimism comes from a combination of factors – the entry into Star Alliance which improves its reach, new code share arrangements, but above all the fall in oil prices. According to an Air India official, it expects a good 15 per cent savings in its annual fuel bills of about Rs 9,100 crore. Global oil prices have slumped from a high of $115 a barrel to under $60 a barrel in six months.
Oil Prices
However, riding on oil prices, which could fluctuate, alone cannot restore Air India's balance sheet. It needs to improve passenger loads. According to S. Venkat, Air India's Executive Director of Finance, passenger load on international routes has risen to 74 per cent and on domestic to 78 per cent, helped no doubt by the sudden disruption in Spicejet services (though Nandan shrugs that factor off saying "we are not vultures").
According to Venkat, Air India has been earning Rs 50 crore per day on passenger revenues in December and expects the momentum to continue. However, he admits that for the airline to turn profitable, more cargo revenue needs to be generated.
20/12/14 Chitra Narayanan/Business World
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Air India's optimism comes from a combination of factors – the entry into Star Alliance which improves its reach, new code share arrangements, but above all the fall in oil prices. According to an Air India official, it expects a good 15 per cent savings in its annual fuel bills of about Rs 9,100 crore. Global oil prices have slumped from a high of $115 a barrel to under $60 a barrel in six months.
Oil Prices
However, riding on oil prices, which could fluctuate, alone cannot restore Air India's balance sheet. It needs to improve passenger loads. According to S. Venkat, Air India's Executive Director of Finance, passenger load on international routes has risen to 74 per cent and on domestic to 78 per cent, helped no doubt by the sudden disruption in Spicejet services (though Nandan shrugs that factor off saying "we are not vultures").
According to Venkat, Air India has been earning Rs 50 crore per day on passenger revenues in December and expects the momentum to continue. However, he admits that for the airline to turn profitable, more cargo revenue needs to be generated.
20/12/14 Chitra Narayanan/Business World
