Growth the single agenda, Air India Express defies the standard LCC model

Mint

28-04-2025

In the second half of April, two A321s started operating for Air India Express, the low-cost arm of Air India. This could have been a routine deployment for any airline, except for Air India Express, the 108th aircraft in the fleet is a new type.
With the induction of these two aircraft, the airline now has B737-800NG aircraft, the only type it had when it was privatised, the B737 MAX8 (part of the order placed by Air India group in 2023), A320ceo and A320neo, most of which it inherited from erstwhile AirAsia India, which merged with Air India Express. Some planes came from parent Air India, and now, the A321s also come from parent Air India.
Low-cost carriers traditionally focus on having a single fleet type. This helps the airline keep costs low by having a single training requirement, the ability to swap planes and crew, and ensuring better On-Time Performance and operational efficiency. Additionally, it helps on the engineering and maintenance side by having to maintain spares for just one type of plane.
Air India Express has always been under the shadow of its parent company, Air India. It was a government entity largely restricted to routes from the southern part of India to the Gulf.
Cut to now, the airline has a sizable domestic presence, part of which it inherited from erstwhile AirAsia India, which merged into Air India Express, and some transferred from Air India.
The airline's fleet now includes A321neo, A320neo, A320ceo, 737 MAX8 and 737NG, totalling a little over 100 planes. While it has been a traditional operator of 737NG and built capability for the 737 MAX8, it inherited the capability to maintain the A320 family from erstwhile AirAsia India and Air India.
In the end, it boils down to accounting. As an unlisted entity, it may never be known how the airline handles internal transfers, finances and inventory management.
The airline has been expanding rapidly. By May, it will be 1.5 times the size it was last May. The growth is more on the domestic routes, which will be nearly thrice in terms of capacity compared to last May.
However, this growth comes with many ups and downs.
The airline is growing rapidly on some holiday-centric routes like Delhi-Srinagar, Bengaluru-Goa and Tier II routes like Delhi-Ranchi, Bengaluru-Bhubaneswar, amongst others. However, it has also pulled out of routes like Chennai-Kolkata, Hyderabad-Amritsar, Delhi-Gwalior or Jaipur-Pune.
A churn in routes is common when an airline grows as rapidly as Air India Express is. However, the airline can hope that this churn is handled well and does not create a negative impact on passengers.
The airline has also been receiving flak for its On-Time Performance, with parent Air India often showing better punctuality.
In its quest to add capacity, it has a livery conundrum. The legacy fleet features the old livery, with each side of the tail depicting a different scene from India.
The MAX 8 have the new Air India Express livery depicting the art and culture imprints from different states of the country, it has a whole bunch of A320s which it inherited from erstwhile AirAsia India which are in Red livery without titles and it has old Air India livery planes with decals mentioning its operations for Air India Express.
In a market constrained by capacity, it is only logical that the airline waits for a major check to take the aircraft out of service and plan the livery change, rather than taking it out twice.
There are also many planes up for redelivery, and they may not be repainted at all. However, such multiple liveries never bode well for a customer-facing business, which is rather particular about its brand image.
India has had two bankruptcies in the recent past, Jet Airways and Go FIRST, with a pandemic in between them. Growth has moderated from what it was ten years ago.
For double-digit growth to return, the country needs capacity, but capacity induction can happen when there are slots at airports, which are hard to come by at most large airports in the country.
Amidst this, the Air India group is pushing Air India Express, seemingly with a lower cost structure, to be the flag bearer of competition against IndiGo and fill the void left by carriers which collapsed.
In the past, IndiGo used its superior financial numbers to push competition by dropping fares on competition-specific routes. However, Air India Express is coming in with a force which was not seen before, thus making it difficult to counter with the same strategies. As long as the battle helps the consumers, it will be a good battle in the industry where the two players are backed by large groups.
First Published: 28 Apr 2025, 12:40 PM IST