Dubai: Indian flag carrier Air India’s latest mega deal with Boeing and Airbus to acquire 470 planes will not only add capacity on key India-UAE routes, it may also see the carrier establish untapped routes to non-metro cities.
And not only that. Once Air India absorbs the other Tata group airlines into a single entity, it will become a serious competitor to other full-service airlines operating this route, as well as a lucrative alternative for passengers who right now use connection flights via Dubai and other GCC cities.
Air India is moving full-steam ahead to become a ‘world-class proposition’, in the words of Tata group Chairman N Chandrasekaran.
An aviation expert told Gulf News: “While the Dubai-India operational capacities have hit a saturation point due to exhaustion of traffic rights on the big metro destinations, route expansions to smaller cities in India are a huge potential market. For example, improved connectivity to cities like Goa and Indore stands to gain from the mega deal.”
That being said, there are still routes available in the India-Abu Dhabi sector which Air India could use to maximise its operations in the UAE, said the expert.
And as far as pan-GCC expansions are concerned, the scope remains robust. The carrier plans to buy 40 long-distance wide-body A350 jets, 140 A320neo and 70 A321neo single-aisle aircraft from Airbus.
From Boeing, it said it would buy 190 of the narrow-body 737 Max jets, 20 twin-aisle 787s and 10 777Xs, with the option to purchase another 70 aircraft.
According to P.P. Singh, Regional Manager of Gulf, Middle East, and Africa at Air India and Air India Express (AIE), a total of 450 flights operate on the Gulf Middle East and Africa (GMEA) region per week. “We have 39 Dreamliners, and several flights in the 320 families, including 28 Airbus 321s, 79 Airbus 320 Neos, seven 320b’s, and 15 Airbus a319s. We have 278 Boeing 737s operating for Air India Express,” explained Singh.
In terms of the UAE breakdown, the carrier operated 35 Dreamliners to Delhi, Mumbai and Kochi. “We have 49 planes from the 320 families, including the Neo and 177 Boeing 737s of Air India Express,” said Singh. Regarding UAE operations, 261 flights ply between India and the UAE per week, which is more than half of the GCC operations.
In terms of Air India’s route expansions in the UAE, the decision would remain a bilateral understanding between both nations. “We are hopeful operations would go up, and Air India would become a dominant carrier in this part of the world,” said Singh. He added: “For now, our current load factors stand at 80 to 85 per cent, and forward bookings are looking very robust. The summer is looking extremely encouraging,” he added.
As far as the deal is concerned, there is replacement and growth capacity following the agreement. Satyendra Pandey, Managing Partner, Aairavat Technology and Transport Ventures, said: “Order is 470 aircraft and 370 options. Air India, at the present day, consists of four entities – Air India, Vistara, Air Asia, and Air India Express. I expect deliveries of the new aircraft will be accelerated in the initial years and smoothened out in the years after.”
Pandey explained: “When you look at the capacity plans internationally, things get interesting. Because if you look at the international traffic profile from India, 60 per cent is to the Gulf, and the airline’s second-largest market is the UK. We could see more long-haul and ultra-long-haul flights that bypass the hubs. For example, Air India could put in direct flights from Bangalore, Delhi and Mumbai to San Francisco, Milan, and New York.”
Due to the direct flight option, this strategy could work well for business travellers who currently prefer Emirates, Etihad Airways, and Qatar Airways. Pandey also said another major catchment area of the airline could be Central Asia.
Business vs leisure travel
For leisure travellers, price matters. “I would think twice, save that money and transit via Dubai as a one-stop to a long-haul destination provides a generous discount,” explained Pandey.
Airlines must provide a value proposition that offers faster service, better connectivity, and hub bypass to gain passenger trust. It is valued by passengers when airlines have clean seats, decent service and food. “For short-haul flights, passengers would still gravitate towards that if they don’t get food but get a good price. With this move, pricing will be more competitive and has to go down. However, it would be the airline’s ability to capture premium that matters. The Tata group is well-known for its service sectors. Hopefully, that can be replicated,” he added.
One significant potential implication of the deal is the demand, availability and supply of pilots, said Maximilian Buerger, MD of AFM.aero and Aviationfly.com.
“India has historically been a strong source of experienced pilots for Middle Eastern carriers. With the strong aircraft fleet growth in India over the coming decade and the resulting demand for pilots, it could impact the availability of pilots for regional airlines,” said Buerger.