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Business News/ Industry / Air India Express wants to double market share in five years

Air India Express wants to double market share in five years

The Tata Group-owned airline wants to become the preferred airline for those visiting Tier II and Tier III destinations

Aloke Singh, MD, Air India ExpressPremium
Aloke Singh, MD, Air India Express

Tata Group-backed Air India Express aims to double its market share on domestic and short-haul international air travel segments over a period of five years, and wants to become the airline of choice in a network of Tier II and III destinations in India, a top executive of the airline said.

“In a five-year horizon, we want to target a market share of 20% in short-haul international segment; right now, we are at 11%. We also want to double our domestic share to 15-16% as compared to 7.5-8% now," the company’s managing director Aloke Singh said in an exclusive interview.

Going forward, as the airline competes with the likes of IndiGo on the domestic turf, it is hopeful of a higher brand recall value on the basis of its product and brand positioning. The airline is also open to launching a loyalty programme for customers.

“It may not be full-fledged loyalty programme but will be a basic loyalty programme which may have some linkage with Air India programme as well," Singh added.

For now, the merger process of AIX Connect, formerly AirAsia India, is underway with Air India Express, which is likely to be completed by April, Singh said.

Under a government-led strategic divestment programme, the Tatas acquired full ownership of both Air India and its subsidiary Air India Express in January 2022. In November 2022, the Tata group announced the merger of AirAsia India and Air India Express. As a part of the transaction, AirAsia Bhd divested its 16.67% stake in the airline, allowing the Tatas to buy it for 155.65 crore.

The company currently has a fleet size of 64 aircraft, including 28 Airbus A320 and the rest are Boeing 737 family aircraft. It is set to increase substantially over this year as the airline is set to induct at least 40 out of the 190 Boeing 737 MAX aircraft that Air India has ordered.

“We are getting an aircraft every eight to nine days. So, we have taken delivery of 10 aircraft so far. We expect to induct 40 aircraft over the next 12 months. By the end of five years, we are looking at a total fleet size of 180 aircraft as some aircraft will be retired," Singh said.

He also reiterated that Air India Express will continue to have a mixed fleet of A320 and B737 aircraft. “There are challenges in a mixed fleet but firstly, we are looking at fleet from group perspective so aircraft asset can be fungible. Also, when you are growing fleet size to that scale, the benefits of single-aircraft type start diminishing, resulting in diminishing returns," Singh added.

The airline has focused on resonating with the price-sensitive flyer from Tier II and III cities. While offering an all-economy product, the airline will target customers from categories of visiting friends and relatives, leisure oriented, inbound and outbound tourists, small and medium enterprises, and some amount of corporate traffic as well.

“When you look at air traffic growth in the country, Tier II and III cities never fail to surprise us. We operate out of Surat. Who would have thought Surat can sustain the number of flights that we are sustaining? We have daily flights to Delhi, Bengaluru, Kolkata, and flights to Sharjah and Dubai. The Indian market is so deep and vast," Singh said.

Under the network strategy, Air India Express is clear that it wants to have a “meaningful presence" of being at least the second largest airline from a destination, provide more flights to domestic and international destinations, and then move to nearby cities only to implement the same strategy to expand further. While the current ratio of domestic and international flights under Air India Express is 50:50, the company aims for a higher domestic presence after 1-2 years.

The airline is also rationalizing the networks of Bengaluru-based AirAsia India and Air India Express to feed traffic into each other’s network. The same plan is also being implemented by feeding traffic to Air India hubs such as Delhi and Mumbai for long-haul international flights.

“So, routes which have predominantly price sensitive segment, it may be better served with the business model that we have such as Delhi-Surat, Delhi-Ranchi. Routes such as Delhi-Dubai, Mumbai-Dubai can be better served by a product which has a more premium end," he said.

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Published: 21 Jan 2024, 10:56 PM IST
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