Stock India airport passengers
Flights from UAE to India are doing OK, but it's the inbound that's creating much of the demand slackness now. Image Credit: PTI

Dubai: With tickets available at Dh300-Dh600, demand on flights to India from the UAE are running steady – but it’s the inbound flights that are proving tricky.

It’s the same on other crucial sectors, such as Pakistan, Bangladesh and Sri Lanka. “Demand for travel between the UAE and critical labour markets such as India, Pakistan, Sri Lanka and Bangladesh remains somewhat on a tightrope,” said Saj Ahmad, Chief Analyst at StrategicAero Research.

Saudi Arabia and Kuwait continue their ban on flights from India. This led to hundreds of Indian nationals with valid Saudi and Kuwaiti visas trying to get to their destinations via the UAE.

After many of them were stranded for days in Dubai and Abu Dhabi, the Indian embassy and consulate even issued an advisory asking its stranded citizens to return home. “Due to COVID-related restrictions on incoming passengers, currently it is not possible for Indian nationals to transit via Dubai and Abu Dhabi to Saudi Arabia and Kuwait,” the statement said.

The uncertainty in the Gulf’s labour market has been compounded by whatever decisions governments are taking to control the COVID-19 spread.

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Rates steady, demand dives

Each add-on is compounding the problems airlines are facing, more so after the rupture in services between the UK and UAE. Amidst all this uncertainty on the likely return of full services, fares have not changed much.

A one-way ticket to India’s financial capital Mumbai from Dubai costs Dh300 to Dh600, while a seat to New Delhi is between Dh300 to Dh400 on Indian budget carriers. The south India destination of Kochi also has similar fares.

Flights from Sharjah to Dhaka cost over Dh1,000 on Air Arabia. The budget carrier also offers flights from its UAE hub to Kathmandu for Dh643.

Stock Dubai airport 2021
Airline rates to the Subcontinent remain aggressively priced, at Dh300-Dh600 to key cities. Image Credit: Ahmed Ramzan/Gulf News

Some relief

“The busier Indian routes could provide some relief for UAE carriers impacted by the UK's decision to suspend flights,” said Linus Benjamin Bauer, Managing Director of Bauer Aviation Advisory.

Flights were suspended following the UK's decision to add UAE to its travel ban. The move essentially shut down one of the world’s busiest air routes.

“Demand for travel between India and the UAE has remained relatively strong during the pandemic thanks to a ‘bubble agreement’ between the countries,” said Bauer. “But Indian routes are even more important to Emirates and Etihad now that key markets like the UK have been all but cut off.”

But the curbs on Indian workers flying into Saudi Arabia and Kuwait and using Dubai or Abu Dhabi as transit points will have impacted demand.

“For the here and now, demand will remain fragile for a long time yet – not even the summer season will change that,” said Ahmad. “With Ramadan less just weeks away, there will be yet another impact on demand as people traditionally avoid travelling during the month.”

Rates on the rise
There is a bright spot in the form of the Philippines lifting its ban on travelers from UAE.
Starting February 1, the Philippines allowed Filipino citizens and foreign nationals to enter subject to certain conditions. The country’s budget carrier Cebu Pacific is offering tickets for over Dh2,000 on Dubai-Manila flights, while on Philippine airlines it's gone past Dh3,000.

It used to be as low as Dh611 until recently on Cebu.

However, fares to Manila are seen dropping within the Dh800 to Dh2,000 range by mid-March and April.

Fewer routes

“In the short term, there’s going to be pressure on capacity deployment – airlines simply cannot risk unleashing airplanes onto routes where yields and low load-factors mean that profitability will be zero,” said Ahmad.

In other words, it's going to be a long-haul for UAE and Gulf airlines to return to more profitable ways.