Saturday, 3 June, 2023

Is Air India Going to Be Asian Emirates?

Nironjan Roy

In 2005, I was travelling by Air India flight from Kolkata to Mumbai where one of my senior colleagues and my mentor in my banking career was supposed to receive me at Mumbai Airport. At Kolkata Airport, the flight was inordinately delayed, and the departure schedule was changed several times. During that period, cell phone communication was not so available that I could communicate with my colleague to keep him updated with these changes. So, I was not suffering alone, but rather causing other people to suffer due to such bad service of the largest Indian airlines. Even, flight operation and in-flight service were so bad that I decided not to fly by Air India anymore. My bitter experience with Air India flight was about two decades ago, and by this time, the situation has gone through phenomenal changes. Air India has been privatized because the Indian conglomerate, Tata Group, has purchased this airline at the cost of USD 2.20 billion from Govt. of India. Since then, Air India has been trying to make expansive measures for renewing its fleet and expanding its service in the global airline industry. Recently, they are looking forward to emerging as the largest airline hub which may be compared to the Asian Emirates because they have finalized the deal for procuring 470 aircraft from both Boing and Airbus at the cost of over USD 60 billion, which is so far known as the biggest deal in commercial aviation history.

Aviation industry in Asia: According to data from Cirium which maintains aviation data, India has about 700 aircraft which include 50 widebody jets. China operates about 480 twin-aisle aircraft and Emirates fleet has 260 widebody jetliners. Last year, Indian Airlines has overtaken China in the aviation industry. In the USA, only one airline, United Airlines Holding Inc. has more aircraft than the total aircraft India has, although the Indian population is four times the US population. Air India has strategically divided their largest aircraft procurement program into two separate deals, of which one goes to European aviation company Airbus SE while another deal goes to US aviation company, Boing Co. Total procurement deal in purchasing 400 most popular A320 aircraft and 737 family narrowbody jets together and additional 70 widebody jets. The deal also includes the option of ordering more aircraft to either company. The purpose of splitting the largest aircraft procuring deal into two companies is not clearly known yet. However, it is assumed that the apparent objective is to avoid the risk of putting all eggs in one basket because the record of missing delivery schedules is very common in the aircraft manufacturing industry. Besides, it is well known that in the aviation industry, Booing and Airbus are two archrivals, so Air India will have to make both companies equally happy in this massive business deal.

Air India’s stiff competition: Most competitors of Air India include internationally operating companies, Emirates, Qatar Airways, Etihad Airways, and Turkish Airways which have established massive operation networks over decades. Domestically, they will have to face hard competition with many low-cost airlines such as IndiGo. Even, this largely expanding airline company will have to consider Biman Bangladesh if Biman really decides to expand its business operation and becomes a regional hub connecting its neighbouring areas including West Bengal, Assam and Nepal, because Biman has some exclusive advantages of operating flights in these areas. Biman’s non-stop flight between Dhaka and Toronto has already gained some attractions among neighbouring passengers. So, it is obvious that Air India will have to face stiff competition with many domestic, regional and international airlines which have been operating with a reputation for a long time.

Other impediments: Apart from industry competition, there are other bureaucratic bottlenecks that may be one of the impediments to the way of their high ambition, because service from Airlines has a direct link with some other services from govt organization, especially immigration and visa procedures. India does not allow visa-free entry. As Canadian and US passport holders, we can travel to many countries, including developed ones, but cannot think of travelling to India without a visa. There is even no port-entry or on-arrival visa system in place that can facilitate transit passengers or short-stay visitors, whereas other competing airline hubs, especially Dubai, Qatar and Turkey, have an on-arrival visa system that attracts many travellers to use their airlines. And travellers can visit those countries or enjoy transit by using that option. Moreover, India does not allow dual citizenship, so Indians who have obtained foreign citizenship are required to forego Indian citizenship and therefore, they have to obtain Indian Visa for travelling to their own country. Although the present govt has introduced NRI (Non-resident Indian) status which does not require a formal visa, still this is a kind of cumbersome process. More importantly, obtaining an Indian visa is a kind of nightmare that I bitterly experienced last year when I was trying to obtain an Indian visa from Toronto. Most Indian suffers while dealing with nominated agents or foreign office for various issue related to surrendering Indian passports, renewal of passports, and obtaining NRI or visa. Besides, the immigration process and customs formalities are not friendly at all. So, these bureaucratic bottlenecks, if not removed, may be another great impediment on the way of Air India’s success in their record investment in the aviation industry.

Geographical Inconvenience: It is obvious that Air India’s enormous investment in their drastic expansion project will make them one of the important airline hubs. So, it is presumed that their main competitor will undoubtedly be the Emirates, which is Dubai based. But Dubai has an edge over India from a geographical location perspective because some nearby connecting destinations, particularly the Middle East, Eastern and Western Africa and even East Europe, are conveniently located. On the other hand, Indian cities do not have that convenient location. For example, Emirates can easily transfer passengers from America, Canada, Western Europe, Australia and even South America to various destinations in Africa, the Middle East and Eastern Europe within the shortest possible time, which may be difficult for Air India. Besides, Indian nearby areas are not that extensive aviation market as the passenger travelling rate is very low.

Air India’s exclusive advantage: Air India has the exclusive advantage of their millions of own populations living across the world and travelling from different parts of the world to India every year. According to the report by United Nations, India has the largest diaspora population in the world with over 18 million people from the country living outside their homeland and most of them visit their home country once or twice a year. Besides, operating direct or non-stop long-distance flights will keep Air India an edge over their international counterparts because avoiding transits not only reduce flying hours but also makes the journey hassle-free for travellers. For example, a direct flight from Mumbai to New York takes 16 hours as opposed to almost 20 to 24 hours for other airlines. Air India’s non-stop service to San Francisco is almost half of the other alternative available options. Even Bangladesh Biman’s Dhaka-Toronto direct flight reduces travel time by six to eight hours than other alternative airlines. This is because other international airlines transfer passengers through transit which not only takes additional time but also causes a kind of suffering. On this point, Air India will have some special features that may attract more customers.

Challenge for Biman Bangladesh: Some people may consider Air India’s massive expansion plan as a new challenge to our national carrier, Biman Bangladesh Airlines. It may partially be true because Bangladesh Biman is not the direct competitor of Air India. Even, the market and target passengers of these two neighbouring airlines are different as well. Besides, it is proven that when a neighbouring big company creates massive new opportunities that will create new business scope for other small carriers too. When Emirates became the largest airline in the Middle East, other airlines viz. Qatar Airways, Turkish Airways also got benefitted. However, Biman Bangladesh Airlines will have to undertake some extra measures, especially expanding their direct routes in more long-distance cities including New York, Australia and Western Europe. They must take measures in exploiting the opportunity of being a regional hub. Their service quality, including flight operation and in-flight service, is already well-standard. In a nutshell, if Biman is required to survive and continue its operation as a profitable platform in the face of emerging stiff competition, our flag career has no other choice but to establish its flight operation as a regional hub.

It is understandable that Tata Group, which is an internationally reputed conglomerate and owns Air India, must have taken all these challenges and opportunities into active consideration while finalizing this enormous investment program. So, beating the competition may not be a difficult task for them and therefore, failure of the project is an almost unlikely situation. Nevertheless, the fear is the amount of investment and there is the precedence of project’s failure of many internationally well-reputed companies despite in-depth SWOT (Strength, Weakness, Opportunity, and Threat) analysis. Moreover, in order to make their ambitious program a complete success, the Indian government will presumably extend their all-out cooperation which is already reflected through the modernization of their airports in Mumbai, Chennai and New Delhi where passenger handling capacity is innumerably increased with the construction of additional terminals. Making travellers-friendly immigration and customs formality and easing the visa process will extensively help Air India achieve their goal. Besides, Air India has a sort of business partnership with another Asian reputed airline, Singapore Airline, which will act as an added advantage for them. With overcoming all challenges and exploiting exclusive advantages, if their massive 60-billion-dollar expansion plan receives desired success, Air India is going to be the Asian Emirates that has become a well-known symbol of airline hub.


The writer is a Banker based in Toronto, Canada.

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