Air India goes luxe to lure premium flyers, boost profit

New Delhi: Air India is starting to deploy the latest aircraft, retrofit cabins of its older planes, and unveil posh airport lounges as it sharpens focus on premium passenger traffic to shore up revenues and return to profitability.

In the past week, the Tata Group-owned airline unveiled a brand-new Boeing 787 Dreamliner plane and a swanky lounge at its main hub at Delhi airport. The initiatives are the first visible results of the airline's efforts to transform itself from a once government-owned loss-making enterprise to a global competitor.

Air India plans to induct six more of these long-haul planes this year and replicate such lounges at its other popular destinations such as San Francisco and New York.


Some of the Dreamliners could even see first class cabins, adding to the current business class.

"By the end of this year, we'll have about half, a little bit more than half of our wide-body aircraft upgraded to a new standard," said Campbell Wilson, CEO, Air India. "It will take another 18-24 months beyond that to complete the rest of the fleet (upgrade)...but increasingly we will have a very much more consistent world-class experience on Air India."

"It is an exciting time, and I think the new Air India is starting to become visible," said Wilson.

The carrier is spending around $400 million (₹3,622 crore) for upgrading its inflight product in legacy aircraft like the Boeing 777s and also the earlier 787s where passengers have complained about worn-out seats and poor food quality.

Such upgrades, Wilson believes, will allow Air India to charge higher from premium flyers. Front-end cabins like business and first class are the top revenue generators for an airline, often helping subsidise the economy cabin to attract more passengers.

"We are already seeing the benefit of operating planes with new interiors on routes like Dubai, New York, London," said Wilson. "As more and more new aircraft join, it will only improve."

However, supply chain disruptions have challenged Air India's efforts. For instance, one of the chosen seat manufacturers withdrew even after developing prototypes, forcing Air India to restart the process.

Last June, an Air India Boeing Dreamliner crashed shortly after taking off from Ahmedabad airport killing 260 people and dealing a body blow to the efforts by the Tatas to turnaround the carrier it acquired from the government four years back.

Wilson said the delays have deferred product upgrades and expansion plans. "Unfortunately, when you layer in the retrofit delay and the delivery delay, it just pushes back the product upgradation and the expansion plans that we had," he said.

"In the case of the 787, it's about a year behind where we hoped it would be. In the case of the 777, it's about two years behind," he said, adding that many airlines are facing similar constraints post-Covid.

New seats and cabins require certification from global regulators, further delaying roll out.

However, Wilson said despite the challenges, the commitment from the airline and its owner Tata Group remains steady. "Clearly, I think we are in the morning of the fifth day of the cricket test match. A Test match is played over five days," he said.