According to a report from the Press Trust of India (PTI), Indian civil aviation minister Vyalar Ravi revealed before the Rajya Sabha today that Air India’s estimated loss for FY 2010-2011 was Rs. 6,994 Crore, down sharply from the Rs. 5552.55 Crore loss posted in FY 2009-2010.
Ravi also said that, “Based on April-September, 2011 route wise profitability, two routes out of 175 services meet total cost viz Kolkata-Yangon (vice versa) and Kolkata-Kathmandu (and vice versa).”
He further related that, “Based on April-September, 2011 out of 175 services [by Air India], 8 services (are) not meeting fuel cost, 109 services(are) meeting fuel cost but not meeting cash cost, 56 services (are) meeting cash cost but not meeting total cost and two services meeting total cost,”
***Note the traditionally accepted difference between cash cost and total cost for airlines is that total costs include aircraft financing costs and aircraft lease payments, which are not included in cash costs.
An earlier report in the Times of India had confirmed those figures for the routes and also contained the following caveat: “90% of the losses in these six months [April-September] came from international routes. AI lost Rs 791 crore on routes in that time, of which only Rs 57 crore was due to domestic flights and the rest on foreign flights. The entire network planning needs a relook and urgently to cover the revenue-expenditure gap.”
That report also listed Delhi-Tokyo-Delhi as the only profitable flight in Air India’s network, a route not mentioned by Vyalar at the Rajya Sabha.
8 Air India flights not making fuel cost
Bangalore Aviation has obtained the following list of the 8 Air India flights that currently do not generate enough revenue to even cover their fuel costs. One of these routes was already revealed in our post about Air India’s London Heathrow slots: Amritsar-Delhi-London Heathrow.
- Amritsar-Delhi-London Heathrow
- Delhi-Dubai (AI 947)
- Ahmedabad-Mumbai (AI653)
- Delhi-Chennai (AIC 437)
- Chennai-Delhi (AIC 438)
- Delhi-Gwalior-Mumbai-Gwalior-Delhi (AI 421/422)
- Mumbai-Delhi (2x: AI 623 and AI 624),
- Mumbai-Ahmedabad (AI 643)
- Delhi-Mumbai (AI688)
- Ahmedabad-Mumbai (AI 614)
In all, 15 of Air India’s flights don’t make their fuel costs: the map below shows these routes in red, as well as Air India’s profitable flights in green.
*Click map for larger view
As the map shows, Air India’s Delhi operation clearly faces a lot of trouble. Back in 2009, the carrier had shifted towards an intercontinental hub at Delhi’s T3. Yet Air India is today unable to even cover its fuel costs on 7 different sectors from Delhi! Despite having a monopoly on nonstop flights from India to Toronto, Air India appears to be bumbling in its attempt to serve this large market of Indian nationals. It’s time that Air India takes a good hard look at just how viable its international flights from New Delhi are, and whether it really makes sense for Air India to be operating widebody aircraft on domestic “tag” sectors for international routes (i.e. the Amritsar-Delhi segment of Amritsar-Delhi-Toronto).
At any other airline, routes whose revenues did not cover their fuel cost would have been dropped almost automatically; but at Air India; these routes will continue to be operated into the foreseeable future.
In the coming days, we will be analyzing Air India’s financial results for FY 10-11 (and hopefully their annual report with its management commentary as well).