Foreign airlines weather Indian turbulence
CAPA India’s International Aviation Outlook 2012- 13 foresees a number of developments which could surprise and re‐define the aviation sector. Here are the excerpts…
the Indian aviation sector has been through various ups and downs, international traffic has been the steady performer, growing at a compound annual rate of 11.8 per cent over the last eight years.
International traffic growth of 8-10 per cent
International passenger traffic is projected to grow by 8-10 per cent in FY2012/13 to reach approximately 44 million. However, much will depend upon the development of Air India, which has the largest share of international capacity in India at 14.4 per cent.
Short-haul international traffic growth to South and Southeast Asia, as well as the Gulf and Central Asia, is expected to be above 10 per cent as IndiGo and SpiceJet ramp up their overseas operations. GoAir has also applied for permission to launch international services, despite the fact that it has not yet met the qualification threshold of having a fleet of at least 20 aircraft (it has just twelve). However, its application is likely to be approved. Meanwhile, Jet Airways may also deploy its hybrid subsidiary, Jet Konnect, to develop its regional international network.
Foreign carriers remain interested in the India story despite challenges
In the last few months, a number of carriers have either suspended services to India (including AirAsiaX, American Airlines and Qantas) or reduced frequencies on certain routes (Air France, Austrian and Lufthansa). Jet Airways recently announced plans to suspend its MumbaiJohannesburg service from June 12. Reasons for these reductions have included insufficient traffic, poor yields and high airport charges.
For every airline that has faced challenges, there are several incumbent carriers that see growth opportunities, primarily those from emerging regions such as Asia, Africa and the Middle East. Dragonair has announced plans to launch services to Kolkata from November 12 • Etihad will launch an Abu Dhabi-Ahmedabad services from November 12 • Virgin Atlantic will resume London-Mumbai services from October 12 • Kenya Airways commenced a non-stop Nairobi-Delhi service on May 12 • Air China launched a Chengdu-Mumbai service on May 12 • Iraqi Airways launched routes from Baghdad to Delhi and Mumbai in Q1 2012 • bmi commenced a London-Amritsar service on October 11 • SilkAir launched a new Singapore-Kolkata route on August 11 • Singapore Airlines has launched five additional frequencies to Mumbai in the last year
Virgin Atlantic will benefit from the suspension of Kingfisher’s Mumbai-London operation and is planning to schedule the service to facilitate convenient onward connections to at least four US destinations. The airline is expected to emerge as an important player on Mumbai-UK and MumbaiUS routes.
Meanwhile, Africa is a region of growing interest. Kenya Airways, which launched its second Indian destination on May 12, has already identified 4 cities; Ahmedabad, Bengaluru, Chennai and Hyderabad to plan its further expansion over the next few years. Ethiopian Airlines has similar expansion plans.
Several airlines that do not currently operate to/in India are in the process of evaluating the possibility of entering the market in the next 12 24 months which include:
Alitalia and Czech
Garuda Indonesia, Jetstar Asia, Lion Air, Myanmar Airways and Vietnam Airlines
But carriers such as Emirates, Qatar Airways and Turkish Airlines have the most aggressive expansion plans and are pushing for additional bilaterals as their current entitlements are exhausted. Emirates, already operates 184 weekly services to ten cities across India, not including its low cost subsidiary, flyDubai, but has exhausted its bilaterals.
Turkish Airlines, which has daily service to Mumbai and Delhi, is seeking to increase the frequency to double daily and wishes to operate to an additional six destinations.
CEO South Asia, CAPA