A Perilous Passage to India: Memo to AirAsia and Singapore Airlines: This won’t be easy

A Perilous Passage to IndiaTo obtain a license to launch, an airline in India needs more bureaucratic approvals than the city Thiruvananthapuram has letters in its name. But lo and behold, AirAsia India—a joint venture between Malaysia’s AirAsia, India’s Tata Group and one other Indian firm—received a final green light last week. Well, almost final. Assuming no objections from the courts, the new LCC could be flying within the next few months, introducing yet another layer of uncertainty for India’s six incumbent airlines, which are already struggling with a long list of commercial, financial and political maladies.

If only that were the end of the story. Singapore Airlines is also progressing in its effort to form yet another new Indian airline, this one also backed by the Tata Group, also planning to fly A320s and also hoping to launch well before the end of this year—its target is September. Unlike the Chennai-based LCC AirAsia India, this new and still-unnamed airline will provide a more corporate-oriented product and base itself in Delhi.

For Jet Airways, Air India, IndiGo and SpiceJet, the four Indian incumbents flying abroad, there was more bad news last week: another Gulf carrier is on the attack. FlyDubai, an LCC already flying to Lucknow, Hyderabad and Ahmedabad, announced a doubling of its Indian presence—it will soon start flying to Delhi, Kochi and the tongue-twisting Thiruvananthapuram (which also goes by the more manageable Trivandrum). On top of this, Singapore Airlines and Emirates will both start flying A380s to India following long-awaited approval by India’s government. And Malindo Air of Malaysia began flying to India earlier this year and now serves five cities in the country. Indian carriers serve both the Arabian Gulf and ASEAN markets with narrowbodies, implying accessibility by a wide range of carriers, including perhaps GoAir before long.

To be clear, India is not awash in yield-killing capacity growth in the same way that the ASEAN region is, at least not prior to the launches of the two new JVs. But Indian carriers are even more awash in losses, suggesting the country already had the sort of excess capacity that the ASEAN region continues to amass. Results for the January-to-March quarter are not yet in, but…

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