The merger of Tata group’s budget airlines Air India Express (AI Express) and AIX Connect (formerly AirAsia India) into one carrier — AI Express — is on track for completion in the next three to four months, even as operational integration of the two is nearly complete. According to AI Express’s Managing Director Aloke Singh, the airline in its brand-new avatar aspires to double its market share by 2028, more than triple its fleet size to 180 aircraft, and build a dense network focussed on tier-two and tier-three cities, all while working in synergy with parent Air India to realise the group’s vision of emerging as a formidable player in India and beyond.
In an interaction with SUKALP SHARMA, Singh gives a lowdown of AI Express’s vision and strategy to chart ambitious growth in the coming years. Edited Excerpts:
How is the integration of AI Express and AIX Connect coming along?
The past year has been all about the integration, which involves integrating systems, processes, platforms, people, brand, networks and fleets. We have tweaked the combined network to facilitate flows between the two networks. That integration is now moving into a merger, which we hope to complete in three to four months. Simultaneously, a massive growth agenda has kicked in. We are now inducting aircraft at a rate of three-and-a-half per month, and it will continue for a while.
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With steady supply of new aircraft, what shape will your network take?
The new capacity will help us grow significantly. This growth will come from our existing markets as well as some new ones. In our existing markets, we will densify the network and plug gaps that we could not address earlier due to capacity constraints. The broad network strategy is that we will first consolidate our presence and become stronger wherever we already operate. We want to be at least the number two player in any city pair. We don’t want to open too many new stations together. We want to open one station, deploy capacity there to increase connectivity, and spread out from there. As we become firm in a market, it will also help us in rationalising costs.
AI Express was almost exclusively a short-haul international carrier while AIX Connect was a domestic airline. Should we expect the combined entity to be more focussed on the domestic market?
If you put the two networks together, we roughly have 50 per cent capacity each on domestic and international. This will remain so for the next year or two. The domestic portion will then grow to some extent. We will probably end up with about 60 per cent domestic and 40 per cent international. The domestic market is much bigger and our capacity deployment will reflect that.
In terms of market share, we aim to double it by 2028 in both segments—15 per cent in the domestic and 20 per cent in short-haul international.
What is the status of network optimisation at the group level between the full-service carrier (Air India) and the budget carrier (AI Express)?
It has started and will be a continuous process as the nature of markets is dynamic. Route rationalisation at the group level has begun. Different operational models suit different markets. If we see that a market is better served in financial terms by the low-cost model, then we will deploy the relevant product. There will be markets where operating premium products will offer an upside, so the full-service product will be offered there. In markets and segments that are big and deep enough, we would look at straddling both product offerings.
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The market sees IndiGo, which has a domestic market share of over 60 per cent, as your biggest competitor. How do you look at that challenge?
The market is big enough and deep enough, and has space for a number of players. The broad thrust of our network strategy will be a lot more focus on tier-two and tier-three cities. We will also focus on international operations from tier-two cities, because that is a space we understand very well. We will not be concentrating our capacity on large cities. Of course, there will be some capacity deployed there, but a large part will be for tier-two, tier-three cities.
So, you are looking at a point-to-point network instead of hub-and-spoke?
Yes, it will not be focussed on a large hub. However, our network will have a number a focus cities, probably 10, where we will also transfer passengers. Like, Kochi may not be a hub per se, but it has significant potential for domestic-to-domestic, international-to-domestic, and even international-to-international transfers. Similarly, we are connecting Bangalore, where we have a dense network, to our points in Kerala. For example, we can offer travel from Ayodhya to Kochi via Bangalore, or a Lucknow-Bangalore-Trivandrum connection.
Air India Express operated Boeing 737s while AIX Connect had Airbus A320s. Do you now plan to operate both or retire the A320s?
We will have a mixed fleet. You have to look at the fleet from the group perspective. The fleet will be fungible. We want that flexibility. Having a mixed fleet may have some sub-optimality, but with scale, fleet commonality benefits diminish. If you have 200 or 300 or 400 aircraft, due to the large scale of operations, a mixed fleet is not too different from a single-type fleet.
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Our plan is to have a fleet size of about 180 aircraft by 2028. We have a legacy fleet of 26 737NGs (737 Next Generation), of which 10 are leased, and 28 A320s, all of which are leased. The leased aircraft will start going back to lessors starting this year.
The Air India group’s 470-aircraft order includes 190 Boeing 737 MAX planes. Are all of those going to come to Air India Express?
So far, we have not taken that call at the group level. The aircraft deliveries will stretch over years. Some of the Airbus A320s and A321s (also part of the order) may even come our (Air India Express) way. Aircraft type within the group will remain fungible given the long delivery schedule and the decisions will be based on synergies within the group like aircraft engineering and maintenance. But certainly, Air India Express will operate under an all-economy model.
Considering Air India Express has mostly been a short-haul international carrier and given the growth trajectory you are eyeing, are you looking to get into wide-body operations as well?
No, we have no such plans at present. We first want to grow and scale up with our current model (low-cost domestic and short-haul international operations), before thinking about anything else.
By when can we see your legacy fleet in the new Air India Express branding?
We are not going to change the livery on the legacy fleet. One reason is that many of those aircraft will be going back to lessors once the leases expire. Secondly, we want to prioritise the new aircraft, as the painting capacity in the MROs (maintenance, repair, and overhaul units) is limited. We want to paint the new aircraft first and then take a call on the older ones. In any airline’s livery change programme, it takes years for 100 per cent of the aircraft to get rebranded.
Given your thrust on tier-two and tier-three cities, will we see Air India Express applying for routes under the regional connectivity scheme UDAN (Ude Desh ka Aam Naagrik)?
Certainly, we could look at it, if it fits into our route strategy. We would be really interested in international UDAN, but there could be some domestic routes also that could make sense for us.