Falling rupee puts pressure on AI's cost structure; int'l flights provide hedge: Company official
New Delhi, Jan 12: Falling rupee puts pressure on Air India's cost structure and profitability but the airline has some natural hedge as it can charge more for international flights where tickets are priced in foreign currencies, according to a senior company official.
In recent weeks, Indian rupee has been on a decline and touched a record low of 86.04 against the US dollar on January 10. A weak rupee results in higher operational expenses for airlines as most of their costs are in dollars.
Air India's Chief Commercial Officer Nipun Aggarwal said the declining rupee definitely poses a challenge to the industry and to Air India, and the situation has to be dealt with by improving productivity and taking other initiatives.
"Falling rupee does put pressure on our cost structure because most of our cost is dollarised barring the manpower cost which is in local currency. The more the rupee falls, the more the pressure it puts on our cost structure, on our profitability," he said at a media briefing this week.
Air India Group operates 1,168 daily flights, including 313 services to international destinations. Of those overseas flights, 244 are short haul and 69 are long haul.
The group comprises Air India and low-cost carrier Air India Express.
Last year, Air India merged Vistara with itself and AIX Connect was integrated with Air India Express.
According to Aggarwal, the airline has some natural hedge as it flies international lot more than other airlines.
"So, we are able to charge in international currency for international flights and we are able to pass on some of that impact to our customers because we are pricing in dollars or whatever currency is there," he said.
At the same time, Aggarwal noted that not everything is priced in overseas currencies.
"Even on international flights, we do have some impact but some of those are mitigated with the hedge we have but it impacts our profitability and puts pressure on the fares in the market".
Increasing airfares is not easy as the industry is very competitive and the demand is sensitive to pricing, Aggarwal said, seeking to highlight the low profitability of the airline industry.
"We do have to fill the aircraft and if we had so much pricing power, the airline industry's profitability would not be what it is today. This makes it very challenging for us to operate... it (falling rupee) will put pressure on our cost structure, impact profitability and demand," he noted.
In December, the International Air Transport Association (IATA) projected global airline industry's net profit at USD 36.6 billion this year for a 3.6 per cent net profit margin.
"Average net profit per passenger is expected to be USD 7 (below the USD 7.9 high in 2023 but an improvement from USD 6.4 in 2024)," IATA said in its financial outlook for 2025.
Air India is an IATA member.
Taking a broader view, Aggarwal also pointed out that the rupee has been depreciating around 2-3 per cent every year for the last many years, and not just the airline industry but many other sectors have become used to the situation.
"We are also not unique in that respect. We will deal with it and are confident that it is not such a big issue," he added.
The loss-making Air India is implementing an ambitious transformation plan and is slowly expanding its fleet as well as network amid rising air traffic demand.
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Delhi Polls: BJP faces protest, placates MLA amid resentment over ticket distribution
New Delhi, Jan 12: Resentment surfaced in the BJP on Sunday over ticket distribution for Delhi Assembly polls, with a protest held outside its Delhi unit office and an angry outburst by the outgoing MLA from Karawal Nagar who was not included in the candidate list released a day earlier.
As MLA Mohan Singh Bisht threatened to revolt after being denied a ticket from Karawal Nagar, the party rushed to control the damage and announced his candidature from the Mustafabad seat this evening.
A group of protesters from Tughlakabad in South Delhi held a dharna at the gate of the Delhi BJP office, demanding a change in the candidate from the constituency.
"Vikram Bidhuri Tum Sangharsh Karo; Modi Se Bair Nahi, Rohtas Teri Khair Nahi," the protesters, including mostly youngsters, chanted as the party leaders tried to pacify them.
In the second list of BJP candidates for the polls declared on Saturday, Rohtas Bidhuri was fielded from the Tughlakabad seat. In 2020 Assembly polls, Vikram Bidhuri who is a relative of senior party leader Ramesh Bidhuri, lost to AAP's Sahiram by over 13,000 votes.
A similar protest was also held by some party workers outside the Delhi BJP office against Mehrauli candidate Gajainder Yadav after the announcement of the first list of candidates earlier this month.
Bisht, the senior-most BJP MLA in the outgoing Assembly elected five times from Karawal Nagar, openly expressed unhappiness over being denied the ticket to contest from his stronghold.
A senior party leader said he was pacified after a meeting with BJP chief JP Nadda.
Bisht, after getting the ticket from Mustafabad, expressed confidence that he would win the seat for the BJP.
"I met the national president and things were ironed out. I have assured that I will contest from Mustafabad and win the seat for the party," Bisht told PTI.
The MLA said he and the BJP had considerable support in Mustafabad and he has already attended two public meetings there.
The BJP won the Mustafabad seat, having a significant minority community presence, in the 2015 Assembly polls but lost it to Aam Aadmi Party (AAP) in 2020.
Earlier in the day, Bisht told PTI that the party's decision to replace him with Kapil Mishra was "wrong" and its consequences will be visible after voting on February 5.
"You have challenged the 'samaj' (his Uttarakhandi community), not Mohan Singh Bisht. The BJP will lose at least 8-10 seats because of this decision, including Karawal Nagar, Burari, Mustafabad and Gokalpuri," Bisht warned.
The BJP fielded Kapil Mishra, a Hindutva hardliner, from Karwal Nagar in North East Delhi, which was rocked by massive communal violence just after the 2020 Assembly polls.
Sources in the party claimed that there was also "deep resentment" among the Delhi BJP's Scheduled Castes Morcha leaders over being denied tickets from different constituencies including Madipur and Kondli.
A top Delhi BJP functionary stressed that there are many ticket aspirants, so it is natural for those who did not get selected to feel disappointed.
"The BJP is a disciplined party and its leaders understand this. Sooner or later, everyone will realise this and work for the victory of the party giving up their resentment," he said.
The elections to 70 Assembly seats in Delhi are scheduled on February 5. Results will be out after the counting of votes on February 8.
The BJP, out of power in Delhi since 1998, is making all-out efforts to return to power. In the 2015 and 2020 Assembly polls, the party was completely routed by the AAP, scraping through with just three and eight seats, respectively.
