Air India Faces Profitability Challenges Amid Record Low Rupee

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New Delhi,India: As the Indian rupee plummets to an unprecedented low of 86.31 against the US dollar, Air India is feeling the financial strain. The airline's Chief Commercial Officer, Nipun Aggarwal, highlighted the significant impact of the depreciating currency on operational costs during a recent media briefing. Most of Air India's expenses are denominated in dollars, except for local manpower costs, making the airline particularly vulnerable to currency fluctuations.

Aggarwal stated, "The more the rupee falls, the more pressure it puts on our cost structure and profitability." Despite these challenges, Air India is leveraging its extensive international operations to mitigate some of the adverse effects. Since tickets for overseas flights are priced in foreign currencies, the airline can partially pass on increased costs to customers. However, competitive pressures limit their pricing flexibility, making it difficult to maintain profitability without affecting demand.

The airline operates 1,168 daily flights, including 313 international services. To enhance its offerings and attract more premium travelers, Air India is undergoing a significant transformation plan that includes retrofitting its fleet and increasing business and premium economy seating on wide-body aircraft. By mid-2025, all narrow-body planes will feature three-class configurations.

Despite progress in fleet modernization, legacy aircraft such as the Boeing 777s have been prone to delays and cancellations. Aggarwal acknowledged these operational challenges and emphasized that the airline is monitoring aircraft performance closely to ensure reliability.

As Air India navigates this tumultuous financial landscape, it remains committed to enhancing productivity and adapting its operations to meet market demands while striving for a more sustainable profitability model amidst a volatile currency environment.

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