Indian airlines giving tough fight to foreign rivals

FINANCIAL CHRONICLE
Published Sep 24, 2018, 12:55 pm IST
Updated Sep 24, 2018, 12:55 pm IST
They now control 39.1 per cent of business, up from 37 per cent in 2014-15, according to latest DGCA trade numbers.
Helped by lower fuel prices over the past few years and rising travel demand, Indian carriers are now ruling the international skies.
 Helped by lower fuel prices over the past few years and rising travel demand, Indian carriers are now ruling the international skies.

New Delhi: Helped by lower fuel prices over the past few years and rising travel demand, Indian carriers are now ruling the international skies.

Domestic airlines IndiGo, SpiceJet and Air India have wrested the market share of international routes from global rivals in the last four years, steadily improving their standings. Together, they now control 39.1 per cent of business, up from 37 per cent in 2014-15, according to latest DGCA trade numbers (see chart for trends since 2014-15).

 

Experts predict that the climb would continue with the restrictive 5/20 rule now confined to the bin and new carriers planning maiden launches to new destinations.

Talking about reasons of growing market share of Indian carriers, ClubOne Air CEO and former India head of Qatar Airways Rajan Mehra said low-cost airlines such as SpiceJet and IndiGo have dramatically increased their international traffic rights in the last 3-4 years.

“Earlier, foreign airlines used 90 per cent of the available bilateral traffic rights, for example on the Gulf routes, while utilisation from Indian side was only 30 per cent as only Air India flew,” he said.

“Now, the balance 70 per cent is being picked up by IndiGo, SpiceJet and other airlines. They plan to increase it in future so the graph for Indian carriers will keep on rising,” Mehra added.

Expansion by local carriers on short-haul international routes like Dubai, Bangkok, Singapore, Colombo and Saudi Arabia have contributed significantly to the rise in their market share on foreign routes. “With the restrictive 5/20 rule now gone, Indian carriers’ share would further go up,” said Dhiraj Mathur, partner and leader (aerospace & defence), PwC India.

Growing demand for international travel has aided Indian carriers to spread their wings. While budget carriers that offer attractive ticket fares have used their narrow-body jets like A320 and B737 to cover destinations in the Gulf and Far East they are set to add medium-haul routes in Europe after induction of wide-body airplanes.

Additionally, start-up carriers Vistara and Air Asia India are expected to start their international operations in winter. This would further help Indian carriers together beat their foreign rivals.

In the three-months quarter ending June this year, both foreign and Indian airlines together carried 15.7 million passengers, up 6.8 per cent compared to 14.7 million in the same period of 2017. There are 89 scheduled international carriers, 5 Indian and 84 foreign, that connect India with 56 countries through 325 routes.

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Location: India, Delhi, New Delhi




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