Air India expects high revenues in FY 2016-17
Mar 10, 2017: Air India is expecting to report better revenues in FY 2016-17 as compared to FY 2015-16. In fact, the company is expecting to have a total revenue of Rs 22,521 crores as compared to the figure of Rs 20,526.11 crores in FY 2015-16 which is an improvement of around 9.7 percent over the previous year. This information was given by the Minister of State for Civil Aviation Jayant Sinha in written reply to a question in Lok Sabha.
In order to improve revenues, Air India has introduced new routes, preferred seat selection on domestic and international routes, flash sale of seats to increase revenues and PLF, to utilise unsold inventory by launching of airfare equivalent to Rajdhani II-AC fare on select sectors, dynamic pricing and introduction of advance purchase fare and other various sales and marketing initiatives.
The main reason for this increase in revenues is an improvement in capacity utilisation in terms of revenue passenger kilometers by 6.8 percent and an increase in passenger carriages by 6.2 percent when compared to the previous year 2015-16. The passenger load factor is also expected to increase by 1.2 percent in absolute terms that is from 75.6 percent in FY 2015-16 to 76.4 percent in FY 2016-17.
From November 2015, in addition to Riyadh route, B777-200 LR was deployed on Delhi-London route (AI-161/162) and from December, 2015 on Bangalore-Delhi-San Francisco route (AI-173/174). This has helped in increasing operating utilisation of B777-200 LR over 14 hours per day from November, 2015 onward.
The Government had approved a Turnaround Plan (TAP) and Financial Restructuring Plan (FRP) for operational and financial turnaround of Air India. The TAP and FRP provides equity infusion of Rs 30,231 crores upto year 2021 subject to achievement of certain milestones as laid down in the TAP and FRP. The Company has made substantial progress in both operational as well as Financial Areas as per TAP Milestones. As a part of the Turnaround Strategy for Air India, the company, with the overall support of the government, has initiated a number of steps in order to cut costs and losses. These steps include route rationalisation of erstwhile AI & IA route and elimination of route network involving parallel operations, rationalisation of certain loss making routes, phasing out of old fleet and consequential reduction in maintenance cost, joining of Star Alliance, enhanced utilisation of new fleet resulting in production of higher Available Seat Kilometers (ASKMs), closure of overseas offline offices at certain locations, introduction of PSS (Passenger Service System) to have single code and SAP ERP based solutions throughout the organization in terms of increase in revenue and decrease in cost.
