Air India Express: The Next Big Thing In Indian Aviation

Air India's mega order for 470 aircraft made headlines for most of this year, but it did not give way to the full scope of the Air India Group strategy.

One of the consequences of the acquisition of Air India and Air India Express by the Tata Group was that the group now had four airlines. As a natural progression, the airlines are being consolidated into two entities, Air India and the Express business, with Vistara’s merger into Air India being approved by India’s competition regulator, CCI, and AirAsia India being subsumed into Air India Express as AIX Connect.

Air India Express was a no-frills carrier launched in 2005 to provide short-haul connectivity on international routes where there was no need for bells and whistles, such as meal service and seat-back entertainment. It was the product of an exception granted by the government in 2005 to Air India, when other airlines had to have a fleet of 20 aircraft and complete five years of domestic operations before being granted a license to operate internationally.

With headquarters in Kochi, the airline primarily flew from South Indian cities to the Middle East and Southeast Asia. The airline, not used to being in the limelight, has been a profit-making operation for many years now.

AirAsia India, on the other hand, was launched as a joint venture of the Tata Group with Tony Fernandes’ AirAsia in 2014 and lost its way with its inability to grow at the pace it promised at the time of launch. Along the way, Tatas stepped in with capital to keep the airline afloat and found itself as a majority owner of the airline in 2021. In November 2022, Air India bought out the residual stake of AirAsia Bhd in the airline.

When the Tatas became the successful bidder to acquire Air India and Air India Express, they decided to merge their two low-cost entities. It was the sensible thing to do. The two operations don’t have any overlap, with Air India Express operating internationally and AirAsia India operating domestically.

At the moment, the two airlines operate under two different legal entities with different Air Operator Permits. However, they are working together under one Managing Director, Aloke Singh, who was earlier just in charge of Air India Express.

The synergies have already begun to show. Air India Express and AirAsia India are currently operating under an interlining pact, which allows them to sell connections where needed. The airlines are both on a common reservation system, with common customer care and social media handles as well. Air India Express has taken on some of the in-flight products created by AirAsia India and expanded it networkwide. For instance, the buy-on-board meal offering Gourmair, which AirAsia India developed with Taj SATS kitchens, is now served across the network.

Air India Express was left on its own and hardly saw any expansion for years. It operated with 24 airframes, with no planned addition of aircraft, until the new owners took over. And now, their growth will be on steroids. Earlier in 2023, 190 Boeing 737-8 aircraft and 50 options were signed up for by Air India. These aircraft are most probably all going to be allocated to Air India Express.

The airline has indeed confirmed that they will receive up to 50 of these aircraft by the end of 2024, with two-three aircraft joining the fleet monthly. Air India Express has been out there hiring all the pilots they can for the 737s, who are in short supply anyway. Till 2019, Jet Airways used to operate the 737s in India, and now, there are only SpiceJet and Akasa who use the 737s, apart from AIX themselves.

The first two of these new aircraft have already been delivered to the airline, and so has the mandate from the parent entity, Air India. Campbell Wilson, Air India’s CMD, recently mentioned that Air India Express will take over many of the operations for Air India inside the country on routes where it makes sense to offer a low-cost product over a full-service one.

With no resistance to change, unlike, for instance, with Vistara flyers who don’t want Air India to subsume the brand, the LCC could scale up quickly. As new aircraft arrive, Air India Express could build upon the over 7% domestic market share it already has (via the acquisition of AirAsia India). This potentially means Air India Express could very well be a household name in the years to come, just like IndiGo is today.

So far, Air India Express has all the support from the parent entities to effect this change. The airline headquarters have been moved to Gurugram, where the personnel from Air India and Express work next to each other now. The airline will revealed its new look on Wednesday, just two months after Air India held a similar event in Delhi. The new livery and airport touchpoints will bear orange, red and turquoise colours, and unlike Air India, AIX will fly with an aircraft in the new livery right after the reveal.

Air India Express is taking a slightly different approach to low-cost than the market leader, IndiGo. Not undermining the preference for hot meals for Indian passengers, the airline has installed ovens on their aircraft to offer a hot meal on a paid basis to the customers. IndiGo, for roughly two decades, has been sidestepping any need for ovens on board.

Not just that, Air India Express will also bring streaming services on board, which, as per the airline's website, will be known as Airflix. This was a service that was developed by AirAsia India just last year to serve up over 6,000 hours of content on the customers’ own devices, apart from the ability to buy on board as well.

Finally, Air India Express might be in line to join the Air India frequent flyer programme to offer loyalty benefits to their customers over time. Air India Express already participates in the Tata NEU super-app of the Tata group. That IndiGo is preparing to launch its own loyalty programme should only tell you how this move means that the entire aviation industry in India now thinks that they need to ringfence their customers via some loyalty rewards.

All of this will differentiate Air India Express and bring it closer to a hybrid model than being a pure no-frills carrier, which it has been so far. But it will also bring associated costs for the airline. As the past has shown us, in India, airlines are quick to add on the costs, but it takes years to bring profits to the table. Here is hoping Air India Express does not lose sight of its profitability in the process.

Whether it does or not, you will be seeing a lot more of their orange and red in the Indian skies in the years to come.

Ajay Awtaney writes about aviation and passenger experience at LiveFromALounge.com and Tweets at @LiveFromALounge.

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.