Air India CEO Campbell Wilson discusses delays in aircraft deliveries, refurbishment plans, and growth strategies for 2025.
The recent strike at Boeing’s manufacturing facilities in the US and supply chain constraints have impacted the deliveries of 737 Max aircraft and pushed the refurbishment of the legacy widebody aircraft until mid-2027, Campbell Wilson, Managing Director & CEO, Air India Group said, adding that delays have slowed down network expansion plans as well.
The airline was expecting to receive 50 737 Max aircraft by December-end. It has received 35 of them, that were originally built for Chinese carriers. However, deliveries of 15 such aircraft will now stretch to next June.
“The guidance is that it’s going to be a six-month-plus delay to the narrow-body deliveries, whereas the wide-body aircraft are produced in a different factory, but for all of the airframes, there are supply challenges. Every airline is impacted by it,” Wilson said in Gurgaon on Thursday.
“We just have to adjust our plans with respect to 2025,” he said.
While the retrofit of Airbus A320Neo aircraft in three class configuration is underway, the refurbishment of widebody Boeing aircraft will only start next year and is expected to be complete mid-2027.
In December 2022, Air India had announced a $400 million plan to fully refurbish its legacy Boeing 777 and 787 aircraft with the latest generation seats and new in-flight entertainment system.
“We had hoped to start retrofitting 787s and 777s by now. Unfortunately, the global supply chains in some areas are still recovering and seats in particular are a challenge. Once it (retrofit) starts in 2025, we will be doing 3-4 aircraft every month until the full legacy 40 wide-body aircraft are completed,” Wilson added.
As such, the airline is expected to see most of its expansion in domestic and short haul international routes in 2025.
Revival plan
Speaking about the airline’s revival plan, Wilson said that the first phase was “really about stabilising an airline that was really in terminal decline.”
“Then it was about building the capabilities and capacities systems necessary to have a foundation for growth. And we’re now, in that growth phase. In the last little over 18 months, we have, across the group, inducted 100 new aircraft, and over the last year and for the next few months, it’s new aircraft arriving on average every six days.”
Air India had embarked on a five-year transformation journey that it calls “Vihaan.AI”. Under this, the airline completed the first two phases called “Taxi” and “Take-off” and entered the final phase — Climb — earlier this year.
Air India-Vistara merger
In the “Climb” phase, the focus of the airline is to create a fully integrated airline with the merger of Air India and Vistara, improve customer value propositions and drive profitability.
“Merging five airlines (Air India, Vistara, Air India Express, AIX Connect and Indian Airlines) while going through a transformation process has never been achieved anywhere in the world,” Wilson said.
Regarding the future course of action, he said that 2025 will be about bringing efficiency, consistency, and performance that ultimately “Air India wants to be known for.”
He cited the progressive deployment of Air India’s retrofitted or Vistara’s narrow-body aircraft on key domestic metro-to-metro routes.
Flat airfares
On airfares, Wilson cited a report by the International Air Transport Association (IATA) that showed that airfares in India have remained flat when adjusted for inflation and rise in fuel prices, when compared to a baseline of 2015 or 2019.
He said that the airfares have remained flat in comparison to the rise in consumer price inflation (CPI) as well as fuel cost.
“Passenger yields have softened a little bit as Covid’s impact on air travel has normalised,” he added.
“However, for Air India, opportunities in ancillary revenue as well as cargo revenue growth have augmented our total revenue.”
In the last fiscal year, Air India recorded its highest consolidated annual operating revenues of ₹ 51,365 crore (up 24.5 per cent over the previous year), driven by growth in capacity to 105,059 million ASKM (Available Seat Kilometres) (up 21 per cent over the previous year) and improvement in passenger load factor to 85 per cent (previous year 82 per cent).
It had ferried 40.45 million passengers during the last fiscal year by operating about 800 daily flights to 55 domestic and 44 international destinations.
Wilson added that the airline will see most of the air traffic growth coming from domestic and short-haul international operations in 2025 as more narrow-body planes are joining the fleet and legacy wide-body aircraft will be going for retrofit next year.
At present, the airline has an overall domestic market share of around 29 per cent, while it commands a 55 per cent share on the metro-to-metro routes and around 40 per cent on the top 120 routes within India.
