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India still a strong growth market for foreign carriers

As Indian airlines make their way steadily out of the turmoil that embroiled them the last one year, foreign carriers continue to see India as a strong market. Henry Moses, Country Manager, India, Qatar Airways, for instance, called India one of the airline’s most important markets, stating that there is significant traffic in various categories, especially in the VFR traffic, followed by business and leisure travellers. Rakesh Raicar, Regional Sales & Marketing Manager - South Asia, Cathay Pacific Airways revealed that the airline’s load factors from India have consistently been between 80-85 per cent and confident that Cathay will be able to maintain the same or even see an increase.

There is, undoubtedly, a continued sense of optimism as far as the growth out of India is concerned. Evidence of this is the airlines’ continuous expansion plans and additions to their products to better cater to the Indian market in particular. Cathay Pacific already increased frequencies between Chennai and Hong Kong from four flights a week to daily and commenced its new four-times-weekly service to Hyderabad in December. Dragonair has commenced its new four-times-weekly service to Kolkata in November. In addition, new products and the Premium Economy cabin have made an appearance on Cathay Pacific flights from Delhi, Chennai, Mumbai and Hyderabad and will soon be introduced in other routes as well. “We have recently announced an extra flight service from Kolkata effective October,” Raicar added.

Virgin Atlantic recently launched domestic within the UK to Manchester, Edinburgh and Aberdeen. ‘Little Red’ is the name of the new operation. “The new schedule has been tailor-made to suit Indian passengers travelling from Delhi and Mumbai as they can now connect seamlessly to our UK destinations on their preferred airline. The 26 domestic flights a day will strengthen connectivity to our existing long haul network flights,” said Stephen King, General Manager-India, Virgin Atlantic, adding that the strategic alliance with Delta Airlines will create an expanded trans-Atlantic network and enhance competition between the UK and North America, offering greater benefits for customers travelling on those routes.

Malaysia Airlines is also very confident about the Indian market and has recently increased its frequency from Kuala Lumpur to Mumbai to 12 times, revealed Azahar Bin Hamid, Regional Senior Vice President, South Asia & Middle East, Malaysia Airlines.

Having achieved all their targets set for 2012, Turkish Airlines has a very positive outlook for the Indian market. Mehmet Akay, General Manager, Western & Southern India, Turkish Airlines said, “We are investing money in India and that just proves how significant the market is to us. 2012 has been a very successful year for Turkish Airlines. We have achieved all our set targets for the year. Moving ahead, we would like to add new routes and new gateways in India to expand our footprint depending on the bilateral agreements provision.” According to him, there is a pressing need to increase frequency on Mumbai and Delhi routes as the demand is really high. “Turkish Airlines currently operates daily flights from Mumbai and New Delhi to Istanbul, and we have recently deployed B777-300ER aircraft on the Mumbai-Istanbul route with effect from July. We observed an increase in demand on Mumbai-Istanbul route and hence decided to deploy a bigger aircraft for a trial period of three months. Depending upon the performance, we will decide on whether to continue the same or no,” said Akay.

 

Trends in travel

As the skies open up to make the world smaller and destinations more easily accessible, the global traveller has evolved to become more adventurous, more selective and more quality conscious. Chris Fordyce, Regional Commercial Manager - South Asia, British Airways believes that as a market India is evolving rapidly, travel is becoming more aspirational for Indians and they want to explore new destinations and collect experiences. Raicar opined that an increasing ease and availability of travel options is fuelling tourism. The biggest trend, however, remains the increased dependence on technology, with airlines feeling the increased need to provide wider web and mobile solutions for travel planning. According to Moses, the industry is investing in business intelligence solutions and collaborating more to increase operational efficiency and improve customer service and loyalty.

Raicar agreed, stating that passengers globally are frequently looking for exceptional locations to travel and most bookings are being done online. “Passengers in India are gradually moving to e-commerce and making air travel and hotel bookings online. Also, passengers now have more number of vacations planned in the year as opposed to one vacation a year which used to be the trend. Due to easy access to information, the types of holidays are also changing and passengers are willing to explore new places,” he added.

Moses opined that, today, travellers are seeking more value for money, which includes value as a combination of cost, experience, service and convenience. By this measure, low cost carriers are a strong trend. “With the world facing economic uncertainty, travel on LCCs is on a rise. Corporate travel is also now gradually shifting to it,” Raicar said.

 

India as a market

Undeterred by the turbulence faced by Indian carriers the last couple of years, foreign airlines continue to laud India as one of their fastest growing and strongest source markets. Moses opined that India is growing as a main economic hub and shows enormous potential, both as a competitive tourist passenger market and also a centre for passengers travelling on business. Raicar revealed that, in India, Cathay Pacific is constantly reviewing new routes that could be profitable in the future, and is continuously monitoring market demand and exploring new opportunities.

Operating in India, however, does have its challenges. According to Raicar, aviation is a very complex cyclical business that is very sensitive to changes in demand and costs. Many major costs such as fuel are outside the airlines control but can have a devastating effect if they rise too high. All these costs and charges impact the profitability and sustainability of the airlines and will of course add to the cost to the customer. Agreeing with Raicar, King added. “Airport charges have been increasing sadly across the world and that makes life more difficult in an already challenging environment for all airlines. This hike has made Delhi a less attractive airport and India could lose out on potential business.”

Akay agrees that working in India is a bit challenging. “India is a very competitive market and the aviation industry is under constant scrutiny. The biggest challenge I would say are the limitations with regards to bilateral. We have also noticed that Indian travellers book late and it is very difficult to accommodate increasing demands with gateway and frequency limitations.”

Being optimistic about the Indian market, King said, “According to the new regulations, foreign airlines have been allowed to invest 49 per cent in an Indian carrier so we are keeping our options open. The Indian aviation space is facing turmoil now, but India is still a market that has so much potential and I believe that soon the situation will pick up and there will be a time when the Indian aviation space is right at the top.” Commenting on how India has performed in the last year King said, “We have experienced strong growth out of Delhi and our entry into the Mumbai market is a strong reflection of our commitment to grow our Indian business. From the Indian point of sale, we have witnessed an increase of 21 per cent for the London route and 40 per cent for our New York route over last year with a positive growth in market share.”

India, Raicar added, is showing positive changes with the improvements in the airports to make travel more convenient. “However there are massive increases in charges being proposed for many of the airports in India. This increase in charges affects and greatly concerns all airlines as the airlines are already being squeezed by high fuel costs. These high charges also make travelling more expensive which in turn affects the demand. If the stated aim is to make India an aviation hub then customers and airlines should be encouraged rather than discouraged from flying to and from India,” he said.

The opinion all international carriers seem to have in common is the continued growth in Indian air travel. According to Moses, as the Indian aviation sector prepares for its next phase, it will witness increasing demand from the upcoming metro cities, thus increasing demand from tier-II markets will be a key growth driver for the sector.

Speaking about the growth of Qatar Airways in India, however, Moses added, “We have exhausted all the traffic routes allotted by the Government of India. We hope Indian Civil Aviation authorities will give additional access to Gulf carriers in India and if that happens we would like to operate more flights to cater to the demands of global traffic.”

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