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Air India reports operational profit. True long term improvement or just a peak month jump?

National carrier Air India has recorded it’s second consecutive month of operational profit.

The carrier posted an operating surplus of Rs 49.48 Crores ($11.22 million) in December 2010, up from Rs 21.66 crore in November 2010.

While the carrier feels this is largely due to recent efforts at improvement in efficiency parameters and adoption of better yield management strategies, most analysts attribute this to the fact that November through January are the peak travel months of the year in India. It will be interesting to see Air India’s results for month of February 2011.

A company spokesperson said,

“Air India’s combined passenger load factor [PLF] during December 2010 was 70 %. While the domestic operations recorded a high 79.8 %, the international routes also registered a PLF of 67.1 %.”

Air India still has a very long way to go. One can compare the 67.1% PLF to the 80.6% reported by private sector Jet Airways on its international operations just two days ago, and keep in mind this was for the whole quarter which includes a relatively slow October, whereas Air India is reporting only December, the peak month in Indian air travel.

Air India’s network passenger revenue for the first nine months of fiscal 2011 (April through December) rose up 21% to Rs. 7,941 Crores ($1.802 billion) from Rs. 6,564 crores during the corresponding period from the previous fiscal. From this international services contributed 63% or Rs. 5,008 crores up 14.3% from Rs. 4,380 Crores in the previous year. Domestic services contributed 37% earning Rs. 2,933 crores up 34.3% from 2,184 crores last year.

The carrier though reported that there was an increased in routes profitability with 106 of 179 routes making a cash profit. The question which naturally arises is why is the the airline operating the other 73 routes? Political compulsions or any other reason?

What is your view on these points?

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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