Indian Civil Aviation Minister Hardeep Singh Puri, in Parliament, said Air India’s only 21 routes, including nine domestic and twelve international, are profitable.
Only these routes can cover the total cost of operating flights on 100 routes on which the airline operated between April 2019 and March 2020, he further added.
Puri’s response indicated that Air India operates in 56 domestic and 44 international destinations and out of those 101 domestic and 10 international routes, it does not cover variable costs.
He said 83 domestic routes and 11 international routes met the variable cost but not the EBITDAR cost. EBITDAR stands for earnings before interest, taxes, depreciation, and rent (EBITDAR) and is often used in the airline sector as a measure of the operating performance before the rental and the operating costs of aircraft, which can vary.
According to Puri, 38 domestic routes and 41 international routes met the EDITDAR cost but not the cost before interest and tax (EBIT), and 11 domestic routes and 24 international routes met the EBIT cost but not the total cost.
EBIT is a company’s earnings before taxes and is used to analyze the performance of a company’s core businesses without the cost of capital structure and tax expenses affecting earnings.
Only 9 domestic routes and 12 international routes covered the total cost, he said.
“Air India continuously monitors market developments and the performance of its flights and conducts studies with the aim of withdrawing, introducing new routes or increasing / decreasing the frequency of existing routes. Air India has withdrawn flights that did not meet fixed / variable costs, ”said Puri.
He said that services on loss-making routes will be analyzed based on their strategic importance before deciding whether to withdraw or continue those routes.