Airport capacity shortage a roadblock for overseas foray

Limited bilateral flying rights another challenge for airlines

The two Tata group-owned airlines Vistara and AirAsia India are busy chalking out their international expansion plans, but limited bilateral flying rights and a capacity shortage at Indian airports are among the challenges before them, company executives and industry analysts said.

Major airports like Delhi and Mumbai are choked with air traffic, restricting the addition of new flights, while constrained flying rights may narrow the scope of the two airlines to expand in the Middle East and Asian markets.

AirAsia India has been unable to start operations from Mumbai, while Vistara has been forced to add latenight flights from the city as slots were not available during the peak hours.

The Mumbai airport has a single runway and is equipped to handle only up to 45 aircraft movements in an hour.

“Entry into a market is driven by a couple of factors -- it should make economic sense for us, and we do it with a long-term plan. Right now, Mumbai is slot-constrained. Very honestly, there is no place to land or take off. We will get to Mumbai as and when the infrastructure allows,” said Amar Abrol, chief executive officer, AirAsia India.

It’s important to have a meaningful presence at the Mumbai airport for any airline with international aspirations because passengers travelling abroad look for connecting flights. “A strong presence in Mumbai helps get good passenger feed for international routes,” said a travel agent.

Metro airports in India follow the International Air Transport Association (IATA) guidelines to offer slots, which favour incumbent airlines over new ones. Under the guidelines, an airline can keep a given slot from the previous season as long as it used the slot 80 per cent of time.

Senior executives of Vistara and AirAsia India said that with incumbent airlines like IndiGo and Jet Airways cornering most of the existing capacity, prime slots were not available to the two airlines.

“A formula can be reached so that everyone gets a fair share. New airlines need slots to grow or else there will be a duopoly or monopoly, which is not good for consumers. Customers will also have an opportunity to experience new services, and fares are kept in check,” Sanjiv Kapoor, chief strategy officer at Vistara, had said earlier.

While slot constraint is one of the problems, what can curtail the two airlines’ international plans is the limited bilateral rights available to the destinations the airlines are eyeing. Two countries sign a bilateral air service agreement through which they decide the flights or seats per week that can fly into each other’s country. The government then distributes the allocated seats to the respective airlines. Flying rights to many of the proposed destinations of Vistara, such as Singapore and Dubai, are almost consumed, and new agreements have not been signed yet.

For instance, of the total 29,400 seats permitted between India and Singapore, Indian carriers have already utilised 22,000 seats. The quota for Dubai is fully exhausted, and negotiations to increase it have not been successful. The situation could become more complex with older airlines looking to launch flights on these routes.

Industry observers say low-cost carriers like IndiGo and SpiceJet will look to increase the number of flights to Singapore from Delhi and Mumbai markets with long-range narrow bodies like Airbus A320 neo and Boeing 737 Max, and block flying rights. Air India will also add frequency on the Delhi-Singapore route from March.

A senior government official, however, said India would be open to negotiating for more flying rights when airlines were eligible to fly abroad. He pointed out that the agreement with Thailand had been recently restructured to add 6,150 more seats. “I don’t think there will be any constraint of flying rights. It is not a finite resource and can always be renegotiated when our airlines require it,” he said.

Major airports like Delhi and Mumbai are choked with air traffic, restricting the addition of new flights