Key Takeaways:

• Air India is set to nearly double the premium cabins on its legacy wide-body aircraft.
• The airline's front-end revenue has seen a 2.3 times increase since being taken over by Tata Group.
• A new first class cabin is being developed for the Airbus A350, to be rolled out in 2-3 years.
• AI and AI Express are expected to have 120 narrow-body planes each by next year, strengthening hub connectivity.
• The falling rupee poses challenges for profitability, prompting careful fare adjustments.

Air India is embarking on a significant overhaul of its fleet, with plans to nearly double the premium cabins on its legacy wide-body aircraft, as retrofitting commences this year. This initiative aligns with a notable trend towards premiumization in air travel, with the airline witnessing a considerable increase in front-end revenue since Tata Group's acquisition in January 2022. The airline's Chief Commercial Officer, Nipun Aggarwal, stated that front-end revenue has surged by 2.3 times, compared to a 1.6 times growth in the economy segment, highlighting a growing demand for premium travel options (source: Times of India). In parallel, Air India is developing an all-new first class for its flagship Airbus A350, set to debut within the next 2-3 years.

Since Tata's takeover, Air India has made significant strides, adding 92 aircraft to its fleet while revitalizing many previously grounded planes. The merger of Vistara and AirAsia India has bolstered its combined fleet to 300 aircraft. Moreover, revenue has soared over tenfold from $1 billion in FY 2020, supported by a doubling of flight routes and frequency (source: Times of India). As the fastest-growing aviation market globally, Air India is focusing on enhancing connectivity through its hubs in Delhi, Mumbai, and Bengaluru, with AI Express playing a pivotal role in providing feeder services to long-haul flights.

Aggarwal emphasized the importance of strategically improving hub connectivity, stating, "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.” This strategic enhancement comes as approximately 80% of long-haul traffic to and from India is currently dominated by foreign airlines using their own hubs.

The ongoing retrofitting program involves the entire narrow-body fleet this calendar year and will commence with the wide-bodied Boeing 787s. The much-anticipated upgrade for the B777s is set for 2026. Regarding recent challenges such as the declining rupee affecting operating costs, Aggarwal acknowledged, “That puts pressure on our profitability and cost structure, with most expenses being incurred in dollars.” He mentioned that while the airline tries to mitigate these challenges through foreign currency pricing structures, balancing fare increases with demand sensitivity remains crucial for maintaining traffic flow.

Air India aims to solidify its position in a recovering aviation market by focusing on premium services and upgrading its fleet, capitalizing on changing traveler preferences toward enhanced flight experiences.

For more information, visit Times of India and Times of India.