Air India to Add More Premium Seats, Aiming for Higher Connecting Traffic and Growth Opportunities

Tata Group, which has been steering the loss-making Air India since January 2022, has consolidated its airline business and Air India Group's revenues have jumped around 10 times to nearly USD 10 billion now compared to less than USD 1 billion in FY20, according to a senior company official.

Seeking to tap the "huge growth opportunities", Air India will increase the number of premium economy and business class seats in its aircraft, realign flight timings to carry more connecting traffic and rationalise network to deploy optimum capacity.

Tata Group, which has been steering the loss-making Air India since January 2022, has consolidated its airline business and Air India Group's revenues have jumped around 10 times to nearly USD 10 billion now compared to less than USD 1 billion in FY20, according to a senior company official.

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The Air India Group flies 1,168 daily flights that include 313 international services. Among those overseas services, 244 are short haul and 69 are long haul.

Generally, a flight is categorized as short haul if it covers up to 5 hours and as long haul if it takes between 5 to 8 hours.

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Air India's Chief Commercial Officer Nipun Aggarwal said whether it is premium economy or business, load factors have gone up and "we are seeing a lot of traction".

"We are very focused on premium segment (premium economy and business class) and there are huge opportunities. The revenue growth in front cabin has been almost 2.3X and in back cabin is 1.3X. We have been able to achieve this through better timings, better experience at airports, in-flight and better quality of meals," he said at a media briefing this week.

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Noting that front cabin gives more revenues, especially in the case of full service carriers, and the back cabin basically helps to fill the plane, he said Air India will be increasing the size of the premium cabin in wide-body aircraft.

"In the retrofit we are doing, we will add more premium seats. we are almost doubling the premium seats in the wide bodies. business and premium economy," Aggarwal said.

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There are also plans to have first class seats in wide-body A350-1000 planes going forward. Currently, many of the airline's Boeing 777 aircraft have first class seats.

As part of the ambitious transformation plan, retrofitting of the narrow body aircraft has already commenced and that of wide body will start later in the year. 

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Thereafter, from next year onward, all aircraft of Air India will have narrow body planes offering three classes in economy, premium and business.

There will be 53,000 premium seats with new or upgraded product on metro-to-metro routes by mid-2025.
Asserting that now there is the right business model and the right product for the market as a whole, Aggarwal said network rationalisation and realignment of flight timings are continuing.

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At the time of taking over Air India, Aggarwal said that there were 29 overlapping domestic routes and has been reduced to 20-from 20% to 12%. There were 23 overlapping international routes and that has come down to 6-from 26% to 5%.

"We are realigning the network and clearly segregating the market where Air India and Air India Express will operate. This is a continuous exercise. it is based on market dynamics. we will continue to deploy capacities from both the airlines in the best possible way," he said.

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Realignment is being done to get connecting traffic and provide more itineraries to the passengers.

"The average connecting time from domestic to international flights has been reduced to 3.30 hours from 6.30 hours. The connecting time will further improve. Air India wants to focus on hubs and bring traffic from South East Asia, Far East, and SAARC, and then take them to Europe, US, Canada," he said.

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Aggarwal said that focus is on those markets from where we can get more international to international connectivity. I to I traffic is currently around 10 percent, and Air India hopes to increase it to 15-20 percent in the next three years.

"We've tried to schedule flights coming in from Europe and Australia at compatible times. And now, flights arriving from Paris, Frankfurt, and London can coincide with flights flying to Melbourne and Sydney, or vice versa".

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"Similar realignment has been done between South East Asia and Europe, SAARC and Europe, SouthEast Asia and North America, SAARC and North America," he said.

According to him, the I to I traffic flying over India is 130 million, which is around six times the country's own long-haul traffic.

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Air India has 135 narrow body planes and 67 wide body aircraft. It will focus on three hubs -- Delhi, Mumbai and Bengaluru -- and all other markets will be served by Air India Express.

The head room for growth is vast and the outlook is very bright, said Aggarwal, adding that "we have acquired size and scale" and it has become a meaningful and material business for the group.

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The Air India Group currently has around 300 planes, consisting of Air India, Air India Express, Vistara, and AIX Connect.

Vistara was merged last year, and AIX Connect was merged with Air India Express.

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