Air India's international expansion would have been delayed by 5 years if it had waited for new planes, says CEO (2025)

Amidst rising complaints from customers about its service quality on long-haul international flight, especially between India and the US, Air India has pointed out that its aggressive expansion to the US market would have been delayed by five year if the airline had waited for new planes to offer customers a more premium experience, the airlines' Chief Executive Officer Campbell Wilson said on November 28.

"The priority for Air India was to offer customers a direct service between India and the US. With our limited capacity, as only our legacy aircraft capable of flying to the US, we would have missed the opportunity to expand to the US market if we had waited for new aircraft to arrive," Wilson told reporters at the airline's head office in Gurugram.

He added that as Air India takes delivery of more wide-body planes in the next few years, the service quality of its product will improve significantly.

Wilson added that on-time operations of Air India's flights between the US and India have so far been impacted by the health of Air India's legacy Boeing 777-200 aircraft and air space restrictions due to the ongoing conflicts in the world. He also said that as Air India retrofits its legacy aircraft with new seats and parts, the airline's performance and customer experience will also improve.

"Air India will start retrofitting its wide-body aircraft in 2025, and once the aircraft have a better product our service and quality will improve," Wilson said.

Air India had committed to investing over $400 million in the retrofit program back in 2022, and the airline has already selected the seats for its aircraft. However, regulatory design certification and subsequent manufacturing processes have encountered delays due to issues with supply chains.

Wilson added that Air India will limit its expansion to the US market in 2025 and expansion will only happen when new wide body planes start getting delivered to the airline.

"Once it (retrofit) starts in 2025, we will be doing 3-4 aircraft every month until the full legacy 40 wide-body aircraft are completed," Wilson said.

Air India's CEO said delivery of wide-body aircraft from Boeing has been delayed due to the strike at the Original Equipment Manufacturer (OEMs)' factory in Seattle. He added that Air India as a group is expected to take deliveries of 100 new aircraft between 2026 and 2027. while adding that deliveries will be slower in 2025 when compared to 2024. The airline has a fleet of around 300 aircraft at the moment across Air India and Air India Express.

Wilson also said that there is a dearth of wide-body aircraft available in the secondary market at the moment which will also limit Air India's ability to lease aircraft to expand its international operations.

He also pointed out that there has been a delay in getting all the 50 white tail aircraft, which were earlier expected to join the fleet by December this year. Out of the total 50 white tail Boeing 737 MAX aircraft, at least 35 have joined the fleet. These planes are being operated by Air India Express.

"50 white tail aircraft, all of them were to come by December this year... They will stretch up to June next year and that in itself has a little bit of impact...," Wilson said, adding "It is not clear for how long the impact will be. Six months is reasonable for some aircraft."

Generally, white tail planes are those that were originally manufactured for a particular airline and later taken by another airline.

The Air India CEO also pointed out, citing a report by the International Air Transport Association (IATA), that domestic airfares in India have remained flat when adjusted for inflation and rise in fuel prices when compared to a base-line of 2015 or 2019. According to Campbell, air fares have remained flat in India in comparison to the rise in consumer price inflation (CPI).

He added that the airline will see most of the air traffic growth coming from domestic and short-haul international operations in 2025 as more narrow-body planes are joining the fleet and legacy wide-body aircraft will be going for retrofit next year.

The Tata Group-owned airline said that it has a domestic market share of around 29 percent and 55 percent on the metro to metro routes, while its market share on the top 120 domestic routes is around 40 percent.

Wilson also pointed out that yields have fallen in 2024-25 when compared to 2023-24.

"Passenger yields have softened a little bit as Covid’s impact on air travel normalises," Wilson said, adding that the airlines' ancillary revenue and cargo revenue growth have augmented our total revenue.

In the last fiscal, Air India Group recorded its highest consolidated annual operating revenues of Rs 51,365 crore (up 24.5 percent over previous year) driven by growth in capacity to 105,059 million ASKM (Available Seat Kilometers) (up 21 percent over previous year) and improvement in passenger load factor to 85 per cent (previous year 82 percent)

The airline group had ferried 40.45 million passengers during the year, by operating about 800 daily flights to 55 domestic and 44 international destinations.