BUSINESS
The airline which has so far collaborated only with parent company is exploring an option of getting into business tie-ups with other airlines in order to compensate for dwindling passenger traffic to/from Gulf countries
Air India Express (AIE), Air India's low-cost subsidiary that mainly caters to Gulf-based traffic, may soon be forced to do the inevitable.
The airline which has so far collaborated only with parent company is exploring an option of getting into business tie-ups with other airlines in order to compensate for dwindling passenger traffic to/from Gulf countries.
"It's an inevitable part of business as we try to compensate for the slowing Gulf traffic and expand," K Shyam Sunder, CEO, AIE, said.
Asked whether the airline will add long-haul destinations, Sundar said, "We haven't given it a thought. China looks highly impressive, so therefore sometime in distant future we may look into it."
Around 85% of AIE's traffic is to West Asia, which is dropping due to the slowing of economies in that region.
Though AIE earned a profit of Rs 362 crore in fiscal 2016, the management is apprehensive of meeting the revenue target of Rs 3,500 crore this year because of the slowdown. In order to chart its way, the airline is in the process of drafting a 10-year old plan for future expansion by getting into new routes.
The Kochi-headquartered AIE, with a fleet of 23 Boeing 737-800s, flies to major international destinations within a distance of around four hours from India. It flies to 15 international destinations, mostly in Gulf.
However, the airline's plan to fly to Tehran this year may get delayed due to emerging political uncertainties over the US regime's stance towards Iran. According to airline insiders, the US banks may not service the loans to AIE in case economic sanctions are imposed on Iran. The plan to connect Tehran by an Indian airline comes more than two decades after Air India discontinued flights in 1993-94 following sanctions on the country.
Aviation industry experts said since its launch in 2004, AIE had been trying to establish its own identity away from its parent.
"After the mess created by the merger of Air India and Indian Airlines and the subsequent losses, AIE too began to flounder due to labour and other operational issues," a senior AIE executive had earlier told DNA Money.
"At one point of time, the vendors and others put us on cash and carry, even though we were a separate company operating independently of Air India. It's only after a lot of efforts from the government that things began to get better, and we started to get recognised as a different company," said the executive.
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