The following two statements are both true: One, India was a pheromonal growth market for airlines last decade. And, two, India’s airline market barely grew at all last decade.
Two words explain the contradiction: Domestic and international. Domestically, the number of available seat kilometers scheduled within India grew 166 percent from 2010 to 2019, according to data from Diio by Cirium. Impressive. But internationally, ASKs to and from India grew just 58 percent over the entire decade. The story gets even more interesting when looking just at longhaul international ASKs (which includes journeys exceeding 3,000 miles). ASKs for this segment grew a mere 21 percent. Compare that to China, whose intercontinental market grew nearly 200 percent during the past decade.
What’s wrong with India’s longhaul international market?
It’s not that people aren’t traveling overseas to and from India. They are, and in significantly greater numbers over time. But most are flying via an offshore hub, most importantly Dubai but also other Gulf hubs, as well as hubs in Europe (i.e., Amsterdam, Frankfurt, and Istanbul) or East Asia (i.e., Bangkok, Singapore, and Tokyo Narita). Pre-pandemic, even Moscow and other-ex Soviet cities handled sizable volumes of traffic into and out of India. Search online for flights between India and any point in North America or Australia, for example, and what you will mostly see are itineraries offered by foreign carriers through their home hubs.
Indeed, India’s homegrown airlines have failed to develop competitive intercontinental networks. Air India has come closest. By 2019, it was offering nonstop service to 20 airports overseas, not including nearby markets like the Gulf and ASEAN regions, which can be flown with narrowbody aircraft. Of these 20, 11 were in Europe, and six were in North America (New York JFK, Newark, Chicago O’Hare, San Francisco, Toronto Pearson, and Washington Dulles). The other three were Tokyo, Sydney, and Melbourne. Currently, Air India is flying to just 14 longhaul destinations, having dropped several European cities. The airline has, however, added new service to Vancouver.
But, Air India wasn’t exactly winning any awards for good service over the past decade. And it certainly wasn’t leading any lists of world’s most profitable airlines. On the contrary, it was a state-owned basket case for many years, chronically troubled by overstaffing and labor strife. It briefly looked like the airline might have had a chance to evolve into something better around 2005, when India signed an open skies agreement with the U.S. and authorized Air India to renew its fleet with state-of-the-art planes including Boeing 787s. It looked then like the carrier might be having an Air France moment, referring to the French carrier’s evolution from taxpayer albatross to global champion. It was not to be.
Hoping to displace Air India and become the country’s overseas champion were multiple challengers. But all proved unfit for the task. One of them, Kingfisher Airlines, thought it wise to order every plane in the Airbus catalogue: A320s, A330s, A340s, A350s, and yes, even A380s. Unsurprisingly, it did not survive long. Somewhat more rational was Jet Airways, based in Mumbai. But amid financial distress in the early 2010s, it saved itself by selling itself — or at least part of itself. The buyer was Abu Dhabi’s Etihad, which used Jet to funnel Indian longhaul travelers through its own hub. Alas, there went Jet’s chances of developing a global hub in India. As Airline Weekly wrote in 2019:
“India’s largest airline was now essentially a feeder operation for an airline offshore. Partnering with Etihad also precluded it from joining a global alliance or partnering closely with airlines in key markets like Europe or North America. Its intercontinental network would remain greatly underdeveloped, ending 2018 with service to just London, Manchester, Amsterdam, Paris and Toronto — New York JFK and Newark flights via Brussels were ended years earlier, as were flights to San Francisco, Milan and Shanghai.”
Jet would follow Kingfisher to the grave in 2019, leaving Air India as once again the only Indian carrier operating widebodies. That would change in 2020, just as the pandemic began, when a new entrant backed by Singapore Airlines called Vistara received its first 787s, sending them to London, and later Paris and Frankfurt. IndiGo, meanwhile, which grew to dominate India’s domestic market, seriously considered buying Air India’s intercontinental franchise when Delhi was looking to sell around 2017. That July, IndiGo even delivered a presentation to investors outlining its intercontinental ambitions (the presentation is still accessible on the carrier’s website). SpiceJet, too, had an overseas itch, flirting with 787s that it ultimately never ordered.
And so, with the post-pandemic era now underway, India still has just two longhaul international carriers: Air India and Vistara. Emirates, you might say, is India’s true national airline, likely moving more Indian overseas travelers than any other airline. Through Dubai, it connects India to just about everywhere — the Americas, Africa, Europe, Asia, Australasia, and so on.
The story, however, isn’t over. IndiGo, though no longer keen on widebodies, sees potential to serve longer-haul international routes with longer range narrowbodies, specifically the A321XLR that should arrive around 2025. For now, the newcomer Akasa Air, run by Jet’s former CEO, doesn’t have any intercontinental plans. Jet itself is making a comeback, but only with narrowbodies. And you can understand why. Flying longhaul from India is no walk in the park, never mind the prospect of having to compete with Emirates and the like. Another challenge is India’s underdeveloped airports, especially in Mumbai. Still another is India’s high aviation taxes.
None of this is stopping the Tata Group, India’s largest private company. In January, it formally took ownership control of Air India, including its low-cost carrier Air India Express and the group’s ground handling unit. It quickly added domestic flights to boost international connectivity. And last week, new CEO Campbell Wilson, a former Singapore Airlines/Scoot executive, unveiled a “transformation plan,” aimed at “becoming a world-class global airline with an Indian heart.” The plan envisions “dramatically” growing both its network and fleet, improving service and reliability, and investing in people, technology, sustainability, and innovation. Also last week, Air India announced the addition of 30 new planes to its fleet, including five widebodies, specifically Boeing 777-200LRs. They all arrive by March. Reports suggest a much bigger aircraft order is coming. Air India currently has 43 widebodies, 33 of which are operational.
The big question is whether Vistara, also backed by Tata, will merge with Air India. That would boost the latter’s chances of becoming a true global longhaul leader, and perhaps even have itself an Air France moment.