A Look into Air India's Future

Despite its strong position in the highly competitive Indian aviation market, Air India, the country's flag carrier, has encountered numerous difficulties over the years. After India began allowing private airlines in 1994, Air India faced significant difficulty in remaining competitive. Even though the corporation lost a substantial amount of market share, it maintained an excessive fleet and labor force.

Prior to its nationalization, Air India was known as Tata Airlines. Tata, the former chairman of Tata Group, founded it in 1932, and in the early days, Tata himself flew the first single engine de Havilland Puss Moth to carry mail from Karachi to Bombay. As a result of World War II, Tata Airlines became a public limited company. Regular commercial services were resumed in India after the war, and Tata Airlines became a public limited company on 29 July 1946 under the name Air India.

A couple of years later, Air-India International Limited launched international services between Bombay and Cairo, Geneva, and London.

(Air India dropped the hyphen '-' in its name in 2005 to give itself a competitive advantage in computerized reservations.)

Its international routes expanded to all continents, but not South America, in the following decades. The airline started losing money in 2007 and merged with Indian Airlines in 2008 to form the National Aviation Company of India Ltd (NACIL; renamed Air India Ltd. in 2010). Having accumulated billions of dollars in debt over the course of the subsequent decade, the government began seeking to privatize the company in 2017. In 2021, the airline that had struggled for years to find success, was finally sold by the Tata Group. 

Fleet:

Currently, Air India operates both narrow body and wide body aircraft, made up of both Boeing and Airbus aircraft, making for 111 aircraft in total, with an average aircraft age of nine years. There are various narrow-body and wide-body variants of Airbus and Boeing that operate a combination of short, medium, long-haul, and ultra-long-haul international routes for both customers and cargo.

Aircraft Type	Current
	In Service	Parked	Total
Airbus A319	10	8	18
Airbus A320	34	2	36
Airbus A321	13	1	14
Boeing 777	14	2	16
Boeing 787 Dreamliner	22	5	27
Total	93	18	111

The airline plans to add both widebody and narrowbody aircraft later this year. A major fleet expansion is scheduled to take place in the coming months that will significantly expand the airline's network in North America and domestically in India. As part of a major fleet expansion since Air India was acquired by the Tata Group earlier this year, the airline has signed lease agreements and letters of intent for twenty-five Airbus narrowbodies as well as five Boeing widebodies (twenty-one A320neos, four A321neos, and five 777-200LRs). 777-200LR aircraft will be added to the fleet between December 2022 and March 2023, and will be deployed on routes connecting Indian metropolises with the United States. In the first quarter of 2023, the airline will receive the A321s, while the A320s will be delivered to the airline in the second half of 2023. 

In addition to serving domestic markets, these aircraft will serve short-haul international destinations as well. A total of ten narrowbody aircraft and six widebody aircraft that had been placed in long-term storage by Air India have also returned to service in recent months. There are currently 70 narrowbody aircraft in the airline's fleet, of which 54 are currently in service and 16 will be progressively brought back into service by the beginning of 2023. Currently, it has 43 widebody aircraft in its fleet, of which 33 are in service and the remaining 11 are scheduled for return to service by the beginning of 2023.

Network Structure:

In addition to 54 domestic destinations, Air India also serves 43 international destinations. The airline operates international flights from 17 local cities namely, Ahmedabad, Amritsar, Bangalore, Chennai, Delhi, Goa, Hyderabad, Kochi, Kolkata, Kozhikode, Lucknow, Jaipur, Varanasi, Tiruchirappalli, Gaya, Thiruvananthapuram and Mumbai. Due to the establishment of international flights from these cities, passengers from these regions have no longer been required to travel to Mumbai and Delhi, the traditional gateways, to catch an international flight.

Air India Destinations:

International	Domestic
Abu Dhabi International Apt	Agartala
Bahrain	Ahmedabad
Bandaranaike Intl	Aizawl
Bangkok Suvarnabhumi International Apt	Amritsar
Birmingham Airport (GB)	Aurangabad
Chicago O'Hare International Apt	Bagdogra
Dammam (SA)	Bengaluru
Dhaka	Bhopal
Doha (QA)	Bhubaneshwar
Dubai Al Maktoum Intl	Chandigarh
Dubai International	Chennai
Frankfurt International Apt	Cochin (IN) KL
Hong Kong International Apt	Coimbatore
Jeddah	Dehra Dun
Kabul	Delhi
Kathmandu	Dibrugarh
Kuwait	Dimapur
Kyiv Borispol Intl Apt	Gaya
Lagos	Goa (IN) GA
London Heathrow Apt	Guwahati
Male	Hyderabad Rajiv Gandhi Intl Arpt (IN) TG
Melbourne Airport	Imphal
Moscow Sheremetyevo International Apt	Indore
Muscat	Jaipur
Nairobi Jomo Kenyatta International Apt	Jammu
New York J F Kennedy International Apt	Jamnagar
Newark Liberty International Apt	Jharsuguda
Paris Charles de Gaulle Apt	Jodhpur
Riyadh King Khalid Intl	Kannur
Rome Fiumicino Apt	Kolkata
San Francisco	Kozhikode
Seoul Incheon International Airport	Leh
Sharjah	Lucknow
Singapore Changi Apt	Madurai
Sydney Kingsford Smith Apt	Mangalore
Tashkent	Mumbai
Tel Aviv-yafo Ben Gurion International	Nagpur
Tokyo Narita Intl	Nanded
Toronto Lester B Pearson Intl	Patna
Vancouver International Apt	Port Blair
Washington Dulles International Apt	Pune
Yangon	Raipur
Zurich Airport	Rajkot
	Ranchi
	Silchar
	Srinagar
	Surat
	Thiruvananthapuram
	Tirupati
	Udaipur
	Vadodara
	Varanasi
	Vijayawada
	Vishakhapatnam

Additionally, Air India has code-sharing arrangements with other international carriers (Air Astana, Air Austral, Air Canada, Air India Express (Subsidiary), Air Seychelles, Avianca, Croatia Airlines, EgyptAir, Ethiopian Airlines, EVA Air, Fiji Airways, Hong Kong Airlines, LOT Polish Airlines, Lufthansa Myanmar Airways International, Royal Brunei Airlines, Singapore Airlines, SriLankan Airlines, Swiss International Air Lines, TAP Air Portugal, Thai Airways, and International Turkish Airlines).

Frankfurt Hub: 

A major step was taken in 2009 by the airline to beef up its global network and restructure its operations to Europe and the United States by making Frankfurt its operational hub. Through the hub, the airline was able to manage losses and expand its US and European connections. Air India offered the most convenient and fastest service on the US-India route, and it also offered world-class services with its most modern Boeing 777-300ERs. In spite of this, the airline decided to close the Frankfurt hub on 30 October 2010 due to high operating costs. In terms of weekly departures, Air India had almost 12,000 weekly departures, made it the second largest non-German airline at Frankfurt Airport after United Airlines.

Competitive Environment:

Indian civil aviation has emerged as one of the fastest growing industries in the country over the last few years. Domestic traffic accounts for approximately 69% of the overall airline traffic in South Asia. As the world's third biggest aviation market, India has a bunch of fast-growing carriers. Indian domestic aviation is highly competitive, from low-cost airlines to full-service airlines. The airline has over 1282 pilots and 1555 cabin crews (in financial year 2020) flying to over 40 countries worldwide. By the end of 2020-21, Air India had a share of 9% of the domestic market, well behind IndiGo's (55%).

Market share of airlines across India in financial year 2021, by passengers carried:

With their Kochi-based wholly-owned subsidiary, Air India Express Limited (AIEL), Air India competes with IndiGo, SpiceJet, Air Asia, and Vistara. Also, as a result of their expansion into the Indian market, carriers such as Emirates, Lufthansa, British Airways, Qatar Airways, and Singapore Airlines often compete with local airlines and offer onward connections to destinations in the US and Europe that are currently underserved by the local airlines.

A significant improvement in Air India's load factor is achieved under Tata group management in 2022, reaching 80%. In the period of January to June, it increased to 80%; however, it is lower than in January in terms of market share. It has been noticed that Air India has experienced dramatic increases in its passenger load factor (PLF) - a measure of how many seats were filled on every flight of the airline. 

Air India 2022’s Load Factor

On domestic flights, Air India has registered an impressive 80 percent load factor from Jan to June. At the same time last year, when it was under the control of the government, its domestic PLF stood at 60 percent. A PLF of 68 percent was achieved throughout 2021. It is very similar to the PLF levels of 2019. However, Air India still has some way to go to catch up with competitors such as IndiGo and SpiceJet, which are better able to utilize their capacity than Air India.

Financial Overview:

Despite a 64% rise in revenue, Air India's net loss increased by a third in fiscal 2022, according to the airline's latest regulatory filings. The airline stated that they had introduced several measures in fiscal 2022 in order to minimize the financial impact of these challenging times, as well as partially mitigate the impact of the pandemic. 

Air India has been supported by the government in various ways under the Strategic Revival Plan and during the COVID pandemic to partly ease its financial situation. Under the 'Vande Bharat Mission', the government asked AI and its subsidiaries to operate passenger flights to international destinations during the COVID period. Along with the financial support provided by the Government of India and various measures taken by the Company to improve its operational efficiency, revenue-enhancing measures, cost control measures, etc., the Company expects improved operational and financial performance to occur in a short period of time.

It is an honor for the Air India group to have flown more than 3 million passengers under the Vande Bharat Mission since its launch on 7th May 2020. As a result of good performance, one of the subsidiaries, Air India Express Ltd., was recognized by The Economic Times as an iconic brand for the year 2021.

The Future of Air India

A comprehensive study conducted, and information gathered indicates that Air India has established itself as the most effective and largest air carrier in India on all fronts. It serves millions of passengers on a regular basis, and it's up to date and relevant. It is expected that Air India will increase its domestic market share from 9% currently to 30% within the next five years, depending on a number of factors - such as the likelihood of Tata Group airlines merging, the speed at which airport infrastructure is growing, the load factor for the forward cabins, and the growth of Akasa Air and revamped Jet Airways. The airline has announced a five-year transformation plan titled "Vihaan.AI", which means a new beginning in Sanskrit. A roadmap with clear milestones has been laid out by Air India for its transformation plan, which aims to dramatically grow both its network and fleet, reinvent their customer proposition, increase reliability and on-time, lead in technology, sustainability, and innovation, and invest aggressively in the best talent.

In an effort to optimize resources and challenge the industry leader IndiGo, Tata group and Singapore Airlines Ltd are integrating their airline businesses Air India and Vistara into a new joint venture. It is anticipated that Singapore Airlines will hold a minority stake in Air India and Vistara under a new joint venture. 

In addition to revitalizing Air India, Tata Group is transforming its customer experience and operational efficiency with technology solutions from Amadeus. With the Amadeus Altéa PSS suite, Air India will manage revenue management, revenue accounting, retailing, and merchandising, website, mobile and frequent flyer program management.website, mobile, and frequent flyer programs. The airline is adopting several cutting-edge technology solutions to transform Air India’s customer experience.

It is encouraging to see Air India is standing out once again on the international stage as a world-class airline that will certainly fly the Indian flag with pride for many years to come. Over the next five years, it will be fascinating to see what else they have planned through Vihaan.AI as well as where their fleet and route network growth will take them.