Air India Now One of the Airlines with Youngest Fleets

Monday, 28th January 2013 at 04:00am

India's oldest airline, Air India, now has some of the world's youngest fleets whose average age is only 2.5 years. This means a lot to the government-controlled airline who has not been profitable since its merger with Indian Airlines in 2007.

In comparison, the average age of the combined fleets of both airlines in time of their merger in 2007 was 14 years.

During their merger, most of the Boeing 747-400s that Air India was flying were bought in 1993 while Indian Airline's own fleet, consisted of Airbus planes, were purchased in 1989.

Though Air India has let go most of its aging fleet, it retains a few units for use on VIP flights carrying the country's top officials such as the President and Prime Minister.

The younger fleet is the result of Air India's new purchases of 111 brand-new aircraft, 68 units of which from Boeing Company and 43 units from Airbus. On January 4, 2013, Air India took delivery of its latest Boeing 787 Dreamliner bringing its current total, so far, to six. The airline had a firm order of 27 Dreamliners which shall all be delivered by 2016. Of the total current fleet, 87 are new planes whose average age is 2.5 years.

Air India's fleet is now younger than Jet Airways' fleet whose average age is 6 years. It is even far younger than most of the world's largest airlines fleets such as Dubai-based Emirates and Singapore Airlines whose average age are 5 and 6.4 years, respectively.

A younger fleet means lesser maintenance cost to the cash-trapped airline as well as enables it to draw more customers thereby making it possible to turn unprofitable routes into profitable ones. With the younger fleet, the airline is now expected to save on maintenance cost this year of up to 43% on average.

An airline executive disclosed that the airline's profitability is now far healthier than the previous year. The acquisition of the Dreamliner, in particular, was considered a game-changing strategy for the airline who is still mired in debt. It will take delivery more of the fuel-efficient airliner this year, with the 7th and 8th units between end January and March.

Since the introduction of the Dreamliners into service on selected routes, the airline's Ebitda suddenly become positive starting November of last year. Ebitda, a term for earnings before interest, taxes, depreciation and amortization, tells the profitability of airline's operations.

The deployment of the Dreamlines on certain routes has increased the total passengers the airline has carried for both November and December last year. By December 21, 2012, it saw its first record revenue of Rs 48 crore.

The airline first recorded three successive months of profitable performance starting November 2012 through January 2013. Thus being profitable compared last year, this fiscal year's loss ending March 31 would be down to Rs.4,270 crore against Rs.6,865 crore in 2010-11.

The government bailed out the airline for a Rs.30,000 crore in April last year.

By: Pete Lee.