AIR India is showing signs of recovery after the Indian government approved its financial restructuring plan and agreed to inject fresh funds into its operations.

The US$600 million equity infusion that will take place over the next eight years will help the cash-strapped national carrier recast its debt servicing over a longer stretch. The airline currently forks out US$48 million in annual interest to banks.

Air India recorded a 7.9 per cent increase in passenger numbers and 46 per cent revenue growth in March, compared to the same month last year. The carrier performed particularly well on international sectors, recording almost 33 per cent year-on-year growth in revenue, which was catalysed by an eight per cent hike in load factor and higher yield of 28 per cent.

In 1Q2012, the carrier’s yield on international routes increased by 18 per cent over the same period last year. Revenue from international operations for the quarter grew by US$9 million, while domestic business jumped by US$8 million.

Anil Punjabi, chairman-east, Travel Agents Federation of India, said: “It will be good for the trade if Air India revives and flies to many (new) sectors. This will also rationalise prices as demand is growing constantly.”