According to Air India CEO Campbell Wilson, many of the airline’s tickets are actually cheaper than the airline’s marginal cost of operations.
According to Air India CEO Campbell Wilson, if the airline is able to charge higher prices on specific routes, it means that more passengers want to fly with Air India. He also stated that many of the tickets given by the Tata Group-owned airline are lower than the airline’s marginal cost of operations. Wilson was chatting with Siddharth Zarabi, Managing Editor of Business Today TV.
He further stated that cutting the costs on certain routes would suggest that the aircraft would be empty, which would be damaging to the airline’s interests. “Airfares are determined by supply and demand.”
They’re also a result of how many people want to buy your product because they believe it provides value in terms of when they want to fly, how they want to fly, and when they want 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 with most airlines,” Wilson explained.
To illustrate his point, the global aviation maverick mentioned Air India’s $70 billion mammoth 470 aircraft contract with Airbus and Boeing. Air India entered purchase agreements with Airbus and Boeing in June of this year to acquire 470 aircraft.
“We’ve committed to 470 planes to increase supply.” We’re leasing planes to do the same thing. We wish to expand in this market. It’s a growing industry; we want to raise our market share, and I believe that as we become more commercially successful, we’ll be able to do so more frequently,” said Air India’s CEO.
The agreement is being billed as one of the biggest civil aviation orders in history. Air India’s order book includes 190 Boeing 737MAX aircraft, 140 Airbus A320neo aircraft, 70 Airbus A321neo aircraft, 34 A350-1000 aircraft, two Boeing 787 Dreamliners, ten Boeing 777X widebody aircraft, and six A350-900 aircraft.
Wilson also mentioned during the interview that passenger turnaround has begun to appear in numbers, as well as that the airline’s market share has expanded significantly. Air India had a market share of less than 10% when it was privatized, compared to 26% to 27% today. He attributed the increase in market share to multiple mergers and acquisitions since the Tata Group took over the airline, as well as the deployment of load and capacity.
Aside from prices and the increase in market share since privatization, Wilson also remarked on Air India’s plans to improve in-flight passenger experience. He stated that $400 million will be dedicated to wide body aircraft overhaul beginning in July or August of 2024. He also stated that the interiors will be refurbished to meet world-class standards. Among the renovations are completely new seats, a new in-flight entertainment system, new restrooms, and new gullies. Wilson also stated that the website has been revamped and that the call center is in the process of transferring.