India has witnessed a revolution in the skies over the last few years, with the number of people opting to fly steadily increasing. While private players like Jet Airways and Indigo might rule our skies, government backed Air India is slowly inching its way up, finding itself in contention after years of dismal performance. According to reports, the company is aiming to double its current fleet, with plans afoot to get more 100 aircraft under the Air India banner by 2020.
Air India will not purchase these aircraft, choosing to lease them instead, thereby saving money and helping it operate without budgetary constraints. The management at Air India hopes that the airline will be in net profit in the next three years, with it having achieved operating profit in the last fiscal.
Air India’s current fleet
Air India currently has a total of 118 aircraft, of which 66 are of the “Narrow Body” configuration, 41 of the “Wide Body” type, and 11 “Regional Aircraft”. Wide Body aircraft are generally used for international routes, and with AI looking to expand connectivity it might require new flights to meet expectations. Of the 118 aircraft, AI owns 77 and leases the rest.
As per the expansion plans, the airline will induct 100 new aircraft into its roster, choosing to lease them rather than outright purchase. In addition to these, the airline will also receive a few planes under its 2006 agreement with Boeing, taking its overall fleet strength to 232 by the end of 2020.
Air India’s debt
Air India has loan commitments to the tune of Rs.50,000 crore, with the government extending financial support worth Rs.30,231 crore in 2012. The airline is paying an interest of 10% per annum on Rs.28,000 crore, aiming to reduce it to 7%, helping it save around Rs.300 crore per year. A total of Rs.1,713 crore has been sanctioned for the Financial Year 2016-2017, with the government hopeful of an improvement in performance.