Impact of the Falling Rupee on Air India

The recent decline in the Indian rupee has put significant pressure on Air India's cost structure and profitability. With the rupee touching a record low against the US dollar, the airline faces increased operational expenses, as most of its costs are denominated in dollars. Nipun Aggarwal, Air India's Chief Commercial Officer, highlighted the challenges posed by the falling rupee and the strategies the airline is adopting to mitigate these impacts.

Natural Hedge Through International Operations

Despite the challenges, Air India benefits from a natural hedge due to its extensive international operations. The airline operates a significant number of flights to international destinations, allowing it to price tickets in foreign currencies. This strategy helps to offset some of the financial pressures caused by the falling rupee, as the airline can adjust its pricing in response to currency fluctuations.

Competitive Pressures and Future Outlook

Aggarwal also discussed the competitive nature of the airline industry and the sensitivity of demand to pricing. Increasing airfares is not a straightforward solution due to the intense competition and the impact on demand. However, Air India is implementing an ambitious transformation plan, expanding its fleet and network in response to rising air traffic demand. The airline remains confident in its ability to navigate the challenges posed by the falling rupee and the competitive landscape of the airline industry.