Air India Express, the low-cost airline under the Tata group’s Air India, reported a net loss of ₹163 crore for the fiscal year 2023-24 (FY24). This marks a sharp decline from the ₹117 crore profit achieved in the previous fiscal year, making it only the second time in nine years that the airline has posted a loss.
Revenue and Expenditure Analysis
Despite a significant increase in income, which rose by 33% year-on-year (Y-o-Y) to ₹7,600 crore, the airline’s expenditure surged by 38.3% to ₹7,763 crore. The primary driver of this loss was the airline’s extensive domestic expansion, which intensified competition with market leader IndiGo. To compete, Air India Express had to lower its fares, impacting its profitability. Additionally, rising aircraft maintenance costs and increased employee expenses contributed to the financial strain.
Fleet Expansion and Operational Changes
In FY24, Air India Express expanded its fleet substantially, adding 22 aircraft on dry lease, including 17 B737-8 Max, four A320 Neo, and one A320 Ceo (from AIX Connect), bringing the total fleet size from 26 to 48. This expansion supported a significant increase in domestic operations, with the share of domestic flights rising from 4% in March 2023 to 44% by March 2024. The airline also introduced ten new domestic stations and new routes, growing its network to 29 domestic and 14 international stations by year-end.
Increased Costs
The substantial fleet expansion led to an 80.57% increase in aircraft repair and maintenance expenses, reaching ₹1,004 crore. Employee benefit expenses also more than doubled, totaling ₹772 crore in FY24.
Merger and Leadership Changes
AIX Connect, another low-cost airline under Air India, is nearing its merger with Air India Express, aimed at creating a unified low-cost subsidiary of Air India. AIX Connect reported a net loss of ₹1,149 crore in FY24, although this was an improvement from its ₹2,750 crore loss in FY23.
Additionally, Vistara, a joint venture between Tata group and Singapore Airlines, is set to merge with Air India by November 12, forming a single full-service airline. On October 31, Hamish Maxwell, senior vice-president (flight operations) at Vistara, will assume the role of chief operations officer (COO) at Air India Express, replacing Pushpinder Singh, who will return to Air India.
This restructuring and operational expansion reflect Tata group’s strategy to consolidate and strengthen its airline operations amid financial challenges.
