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Last Updated:January 13, 2025, 18:11 IST
Air India’s Chief Commercial Officer Nipun Aggarwal says revenue from premium seats has surged by 2.3 times, outpacing the 1.6-fold increase in economy class.
The merger of Vistara and AirAsia India into Air India and AI Express, respectively, has expanded the fleet to 300 aircraft. (IMAGE: REUTERS)
Air India is set to enhance the luxury of its flights significantly by doubling the premium cabins on its wide-body aircraft, which are slated for refurbishment starting this year. Additionally, the airline is in the process of designing a brand-new first-class section for its top-tier Airbus A350 planes, expected to launch within the next two to three years. This move aligns with a growing trend towards premium travel, observed since the airline’s acquisition by the Tata Group in January 2022. According to Nipun Aggarwal, Air India’s Chief Commercial Officer, revenue from premium seats has surged by 2.3 times, outpacing the 1.6-fold increase in economy class.
Previously a Senior Vice President at Tata Sons, Aggarwal played a pivotal role in Air India’s dramatic transformation following its acquisition by the conglomerate. He highlighted the strategic importance of this acquisition: “Pre-AI takeover, Tata Group’s presence in aviation was suboptimal. The market share of our JVs, erstwhile Vistara and AirAsia India, was in low single digits with a combined fleet of 70 aircraft. AI was a once-in-a-lifetime opportunity for us to scale up the business and become viable.”
Since the takeover, Air India has added 92 aircraft, revitalising many that were previously grounded. The merger of Vistara and AirAsia India into Air India and AI Express, respectively, has expanded the fleet to 300 aircraft. Aggarwal also noted significant growth in revenue and operational scale, stating, “Revenue has grown over 10 times from $1 billion in FY 2020; routes and flights have already been more than doubled. There is a meaningful and material aircraft order for the group now.”
To compete with foreign carriers that dominate nearly 80% of India’s long-haul market, Air India is bolstering its hubs in Delhi, Mumbai, and Bengaluru. AI Express plays a crucial role in this strategy, supporting wide-body operations with feeder traffic from domestic and regional routes. By the end of the next year, each airline is expected to operate around 120 narrow-body aircraft, enhancing their hub-and-spoke model for transit traffic.
Aggarwal detailed the competitive landscape: “Foreign airlines account for 80% of the long-haul traffic of about 2.6 crore passengers annually (and growing) to and from India. Of the long-haul travelers, 24% go nonstop, and the rest one-stop. And of those going one-stop, only 15% take their connection in India (like a Nagpur-New York passenger going via Mumbai). Similarly, a huge, almost six times larger, traffic overflies India between the west and the east & Australia via the hubs near us. Through connecting flight timings, we will increase our share in all these areas, including international-to-international transfers, which will be doubled in three years.” He emphasized the strategic importance of long-haul travelers to Air India’s revenue, noting that the airline’s loyalty program would soon encompass AI Express flights as well.
Regarding the financial pressures posed by the depreciating rupee, Aggarwal acknowledged the challenges but pointed to Air India’s international operations as a partial hedge against currency fluctuations: “That puts pressure on our profitability and cost structure, with most expenses being incurred in dollars. AI has some hedge as we fly internationally more than others. We charge in forex and are able to pass on the impact for about half the ticket sales that happen abroad.”
When asked if the falling rupee would lead to higher fares, Aggarwal responded, “Demand is price-sensitive. Raising fares impacts traffic, and so we have to strike a balance. If airlines had that kind of pricing power, the industry profitability would not be like it is.”
News business Air India To Double Premium Cabins On Wide-Body Aircraft: CCO Nipun Aggarwal
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