AI may resume Delhi-Toronto, its biggest loss making flight till FY12

New Delhi: Air India plans to once again offer a direct, non-stop Delhi-Toronto flight from December. This flight was one of the prime loss makers for AI till last year when it was suspended, accounting for over Rs 150 crore loss in 2011-12.

So why is AI now again thinking of beginning this leg on its international operations? Chairmand and MD Rohit Nandan told Firstpost today that the airline will begin evaluating its commercial potential in the “changed scenario” now and take a call soon.

He said earlier, three airlines were flying to Toronto from Delhi - Air Canada, Jet Airways and Air India. Air Canada pulled out last year and Jet operates the flight via Brussels. The Ministry of External Affairs is now believed to be pressing Air India to take a relook at this flight but Nandan said any resumption on this ultra long haul route will happen only if “it makes commercial sense. Even till last year, the problem was not load factors (how many seats on the aricraft filled) but yields (revenue per passenger). If we do decide to restart this flight, we will be the only carrier offering a non-stop connection to Toronto”.

But should a flight, which was single handedly turning in one of the highest loss figures for the debt laden AI, be resumed? If Air Canada did not find it viable, how will the route bring in profits for AI? Diplomatic reasons are surely not enough for an airline to mount flights which have burned its fingers in the past.

Till last fiscal, more than two out of three Air India flights or almost 70% of its capacity were making cash losses. Air India operates 470-480 flights daily so about 330 flights of the airline were making cash losses till March 2012! Some of these flights were not even covering the cost of jet fuel. But during 2012-13, this situation was vastly improved and now, only one in four turn in cash losses for the airline and all flights on its network at least cover fuel cost.

A study conducted by Ministry of Civil Aviation last year found that all destinations in North America, Europe and UK with the exception of New York and Chicago were loss making for Air India in 2011-12. Just 13 overseas routes which AI has been flying for decades accounted for 80% of its total cash the losses in that year. Its total cash losses in 2011-12 were Rs 1491.25 crore, of which these 13 routes accounted for Rs 1121.07 crore. The biggest loss making international flight was the Amritsar-Delhi-Toronto service which brought in Rs 164.25 crore in cash loss or 11 percent of the airline’s total cash loss.

These statistics are frightening enough for AI to reconsider its Toronto service resumption.

Meanwhile, Nandan also spoke of new international flights from the winter schedule, which comes into effect from October 27 this year. He said a four-times-a-week Delhi-Hong Kong-Seoul flight will be operated on the brand new Boeing 787 Dreamliner aircraft. Also, once permissions are in from Japanese authorities, thrice-a-week flights would be mounted on Delhi-Hong Kong - Osaka route.

Then, Air India plans to begin services to Rome and Milan from this winter schedule and to Moscow from summer of 2014. Though aviation regulator DGCA’s data shows the total number of departures for AI during the winter schedule are down to 1721 per week from 1850 last year, Nandan said last year’s schedule will be maintained.

He said the lower number of flights shown by DGCA is because of an earlier plan which envisaged total nunber of aircraft available with AI at 48 against 51 earlier. But now, the airline’s board has shelved plans to return 5 Airbus 319 aircraft and instead renew their lease. Also, another 19 A 320s which were to be replaced by newer aircraft and then reconfigured to single aisle 180-seaters are still with the airline since no new A320s are available in the market. Nandan said now, all 51 aircraft would be available with the airline for the winter schedule.