Air India CEO Campbell Wilson said that if the airline is able to charge higher tariffs across certain routes, it implies that more people want to fly with Air India. He added that many of the airfares offered by the Tata Group-owned airline are actually lower than the marginal cost of operations. Wilson was speaking to Business Today TV Managing Editor Siddharth Zarabi.
He further noted that lowering the airfares on these routes would imply that the flights are going empty, while adding this would be detrimental to the airline’s interests. “Airfares are a consequence of supply and demand. They’re also a consequence of how many people are seeking to purchase your product because they perceive it provides value with respect to when they want to fly, the manner in which they want to fly, the time they wish to fly so we offer a range of airfares on every aircraft and many of those airfares are actually below the marginal cost of operation as is the case for most airlines,” Wilson said.
The global aviation maverick also cited the mega 470 aircraft deal worth around $70 billion that Air India signed with Airbus and Boeing to enunciate his point. In June this year, Air India signed purchase agreements to acquire 470 aircraft from Airbus and Boeing.
“We’ve committed to 470 aircraft to expand supply. We’re leasing aircraft to do the same. We want to grow this market. It’s a growing market we want to increase our market share and I think ultimately as we are commercially successful, we will be able to increasingly do so,” the Air India CEO mentioned.
The deal is being touted as one of the largest aircraft orders in civil aviation history. Air India’s order book comprises 190 Boeing 737MAX, 140 Airbus A320neo, 70 Airbus A321neo, 34 A350-1000, 2 Boeing 787 Dreamliners, 10 Boeing 777X widebody aircraft, and six A350-900 aircraft.
Wilson also noted during the course of the interview that passenger turnaround has started to show in numbers, while further mentioning that the airline’s market share has grown substantially. Air India had less than 10 per cent market share at the time of privatisation versus 26 per cent to 27 per cent at present. He attributed the rise in market share to the various mergers and acquisitions since the Tata Group took over the airline as well as the load and capacity deployment.
Apart from tariffs and rise in market share since privatisation, Wilson also commented on the measures that Air India will take to improve in-flight customer experience. He said that $400 million will be allocated towards refitting of the wide body aircraft commencing from around July-August of 2024. He added that the interiors will also be upgraded to match world-class standards. Some of these changes include entirely replaced new seats, new in-flight entertainment system, new lavatories and new gullies. Wilson also mentioned that the website has already been upgraded whereas the call centre is in the process of transitioning.
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