More competition on Gulf-India route as flight frequency rises
Competition in the price-sensitive Gulf-India sector is likely to intensify with budget carriers such as Air India Express increasing the number of flights, analysts say.
According to reports in the Indian media, from October 25, Air India Express – the low-cost subsidiary of national carrier Air India (AI) – will take over international routes now operated by the company's domestic division known formerly as Indian Airlines. "We operate 196 weekly flights to the Gulf and South east Asia. Now, we will take over 71 Air India flights to Sharjah, Dubai, Kuala Lumpur and Colombo," P P Singh, Chief Operating Officer, AI Express, told an Indian newspaper.
He said: "Six Air India Airbus A320 aircraft, which have both economy and business class seat configuration, will be converted to all-economy with 168 seats for these routes. Air India crew will still operate the Airbus A-320s, though the flights will be marketed as Air India Express flights. We will soon begin bookings.
"The change is part of our route rationalisation drive. There was hardly any demand for business class on Sharjah and Dubai flights from Kerala, and it was felt that this could be better serviced by Air India Express."
Air India had also announced that it would introduce no-frills service on select domestic routes. The airline is currently saddled with a debt of about Rs160 billion (Dh12.2bn) on an equity base of about Rs1.45bn. It has been demanding a bailout package from the Indian Government, consisting of equity infusion and a soft loan.
A separate cost management and audit team is looking at the airline's financial restructuring plan, including debt servicing, risk management and hedging on aviation turbine fuel. The Indian national carrier is in talks for cancellation of orders for six Boeing 777 long-haul planes meant for delivery between 2010 and 2012.
The airline currently has a fleet of 136 aircraft, of which 53 are new ones, which replaced aged and leased aircraft. Another significant measure to cut costs and enhance revenues was the proposal to allow Air India Express to launch domestic operations from next month by deploying 10 additional all-economy aircraft.
The national carrier was estimating an earning of Rs1.8-2bn through low-cost operations on the domestic sector and planning to gradually shift 70-75 per cent of its existing domestic flights to Air India Express.
Another Indian low cost carrier (LCC), SpiceJet, recently expanded its marketing and distribution network in the UAE by appointing Sharaf Travels as its general sales agency. Industry analysts said SpiceJet was likely to launch services to the Gulf as its first move into the international market.
Air Arabia, the Sharjah-based LCC had a load factor of 80 per cent during the first six months of the year. The airline also launched the Goa route during the second half of 2009.
Besides LCCs such as Air Arabia and Jazeera Airways, full service carriers such as Emirates and Etihad have competitive fares on the India-Gulf sector.
Emirates plans to increase the number of its flights to 184 weekly from 166.
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