If you hear the drone of a plane coming in to land and look up, chances are that you will encounter the familiar white and blue livery of IndiGo. The low-cost airline has dominated India’s domestic aviation sector for more than a decade, with an overarching market share of 65.4 per cent as of September.
Between Indigo and its nearest competitor, the Tata-run Air India-Air India Express combo, they have sewn up over 92 per cent of all domestic flights in the country.
But cut to the nation’s burgeoning international air traffic, the picture is starkly different. Foreign airlines put together command more than 60 per cent of all flights flying in or out of the country, while the desi airlines, all of them put together (and this also includes SpiceJet and Akasa, which also fly abroad), come up just above 39 per cent.
Compare this with China, where, led by robust carriers like China Eastern and China Southern, local players hold 66.5 per cent of the international traffic. Even in the massive and evolved US market, home-grown players control a majority share.
What makes Indian carriers’ status more worrisome is that their share has not only been progressively falling—last year, desi players held 46 per cent of all flights beyond passport control, which has now fallen to 39 per cent—but this also comes on the back of feverish expansion plans and massive plane orders from the top two, IndiGo and Air India, signalling that they intend to scale up and dominate the lucrative international traffic from India, which is now the world’s third biggest aviation market.
So what went wrong?
A mix of factors has played spoilsport, and not just because of the conflicts in the Middle East playing havoc with fuel prices. Indian government still taxes Aviation Turbine Fuel, or ATF, at one of the highest rates in the world, while the decline in the value of the Indian rupee vis-à-vis the dollar means double trouble: while most of the bookings and, in correlation, the revenue the desi airlines make come in rupees, they have to spend way more on buying ATF. One, because of the oil price hike, and secondly, because the rupee has been declining against the dollar in which fuel is traded.
Making matters worse has been the closure of Pakistan airspace since Operation Sindoor. That has put the likes of Air India and IndiGo, who have a majority of their international traffic westwards (towards the Gulf, Europe and North America), facing losses running into thousands of dollars. All the while, airliners from other countries, say British Airways or Dubai’s Emirates, have the advantage of not having to adopt any circuitous routes.
The loss is not just in fuel cost. Longer flying hours mean additional expense on crew, since there are strict limitations on how many hours a pilot is allowed to fly non-stop. For IndiGo in particular, the longer hours have been a bigger handicap, since its lease of wide-body aircraft for some of its international routes expired recently, while it has been stretching the capability of some of the plane models like the XLR. Additional hours due to airspace closure have meant even stopovers on the route, adding to cost and time.
It is no wonder that Indigo has been forced to cut many of its international routes, including to Manchester and London Heathrow. Elsewhere, industry sources indicate that it is still running a scaled-down service to Amsterdam with a narrow-body plane, since not operating could have led to losing its slot at this important European hub.
International airlines, anyway, are licking their lips in anticipation, hoping to make hay while the clouds gather over Indian operators. Emirates, which is the biggest non-Indian operator on India’s international scene, is scaling up its premiumisation, as well as optimising its permitted seats to the maximum, while a host of others are either launching new routes to and from India, or increasing frequency – ranging from Swiss International which is supposedly expanding by nearly 40% its capacity to India to Eva, a Taiwanese carrier, which is making a splash all over Delhi with ads for its flights set to be launched from next month. Operators like KLM, Singapore Airlines and Cathay Pacific are all set to be enhancing their capacities, the ultimate lure being transit connections for Indians abroad—towards Europe and North America to the west, and Australia to the east.
Emirates, which has been dominating international traffic out of India for long, was limited from getting more seats by the Modi government, in the hope that the likes of Air India and IndiGo could capitalise on the growing need for international connections instead. But this series of extraordinary circumstances seems to have conspired otherwise. According to one report, Air India offered 3.31 lakh seats on international flights out of India last month, while Emirates had as many as 5.5 lakh seats!
