Dear India Abroad...

Filed in archive Aviation News on March 31, 2010

This is a copy of a letter I sent India Abroad Newspaper regarding one of their articles.

Dear India Abroad,

My name is Vinay Bhaskara, and I am writing in regard to your article entitled, "In five years, India will break into the world's top five aviation markets," which was published in your April 2, 2010 issue. I am a 15 year old aviation blogger (I write for the Aviation Weblog, freelance aviation writer, and part time travel agent. The reason I am writing this letter is to disagree with a couple of points made by Praful Patel in those articles.

While I agree that India very soon will break into the world's top 5 aviation markets, and could eventually end up in fourth behind the US, EU, and China; I disagree with his statement that India will need 2,000 planes over the next 5 years. Already, India has more than sufficient airplanes for maximum growth, as I believe only 1,000 or so are actually necessary. The rest of the growth could be achieved through better scheduling. Take for example Air India's Boeing 777-200LR, which are used to operate flagship services to New York JFK . The aircraft are scheduled to operate their flights from Bombay, then stay in Newark overnight. And the flight from JFK back to Bombay spend the night there as well. Now, if the 2 aircraft used for this route (1 each way), were extended to Kuala Lampur or Bangkok, and schedules altered so that flights depart Bombay in the early morning, arriving at night in JFK, then turn and operate it again (preserving the early arrival in Bombay), while the other aircraft is rotated through Kuala Lampur, and then vice versa, this would allow more destinations to be served with one aircraft, reducing redundant capacity. And the timings would serve high-yielding business passengers in India better.

The second point I wish to make is that when he says he wishes for more Indian carriers to fly to the US, and vice-versa; I respond that it is not feasible for any more direct US-India links at this time, because the demand is already effectively served. Currently, the only non-stop operations feasible are from the Eastern United States to India, which as of now requires a Boeing 777, or Airbus A340-500 (only 777 is operated). And the demand for business passengers (who require nonstops), is already well served by multiple flights on Continental, Air India, and American Airlines. Additional direct links are (soon to be) provided by Jet Airways, Kingfisher (future), Air India, and Delta. And connecting opportunities are provided by a host of airlines, such as British Airways, Lufthansa, and Emirates.... Especially Emirates. Currently, Emirates sustains a lot of its destinations on connecting traffic to the Indian Subcontinent. The high volume of flights to India by Emirates would have to be matched in order for Indian airlines to effectively compete. And the airlines cannot even sustain the capacity levels they are currently at, let alone add more capacity, as evidenced by Jet Airways' downgrade of North American flights from the Boeing 777, to smaller capacity A330. Indian airlines cannot compete, due to their fragmentation, and intercompetition for the same passengers. On these routes, foreign airlines mainly compete for the passengers from the US, and Indian airlines get India-based traffic. Therefore India based airlines cannot add frequencies to India without significant changes in their business models.

Which brings me to my third point, about India's national airline: Air India. The way I see it, Air India's problems stem from 3 issues, exorbitant cost structure, poor quality, and an inefficient business model. The first thing that needs to be addressed is Air India's cost structure. Were Air India a private airline, then they could apply for bankruptcy, but as a national airline that option is not on the table. However, Air India can use a similar strategy by forcibly renegotiating the contracts of its workers to allow for more flexibility and realistic pay, shedding unnecessary jobs, and bringing salaries of executives down. In line with this fact, the Indian government should search for private investors to buy up to 49% in the airline, and after getting the finances in line, set up an IPO to raise cash. The next step would be to get quality up to the standards of other Middle Eastern/Asian carriers. In order to do so, a significant investment needs to be made in improving the interiors of the aircraft, updating the entertainment options, and improving training programs to conform with international customer service standards. In a country where multiple airlines have highly regarded service, and a country that's home to one of the world's only 5- star airlines, Air India should have no trouble in getting quality up to par. And the final point is about Air India's business model. I already touched upon the inefficient scheduling, and ability to use aircraft with better rotation to more destinations. I want to hit upon that further. In order to compete on mid-haul routes to Asia and the Middle East, quality has to be improved, and sustainability of these routes depend on whether an Indian airport can become a connecting hub. Currently, the only airports where operating a hub in India would be viable are Delhi and Bengaluru, as Mumbai is too crowded, and Madras/Hyderabad/Kolkata too small. But even these airports still need additional changes to become viable connecting hubs. The first thing that needs to be done is to turn one Indian airport into an international transit zone, a la Dubai, Tokyo, or the major European airports. This would allow passengers to connect from one international flight to the next without having to go through immigration and rechecking their bags. This would make Delhi more attractive, as it is in a good position to handle Asia-Europe, Asia-Middle East, and the Kangaroo Route. The second thing that needs to be done to increase O&D passengers is to create one terminal for both domestic and international flights. Currently, passengers prefer flying direct versus connecting through Indian hubs because it is such a hassle to get from the International Terminal to the Domestic Terminal, and vice versa. With the exception being Bangalore of course. A building link should be provided to allow passengers to transfer easily from international to domestic flights. The next business model that needs to be reexamined is the India to USA flights. Now the nonstop links are fine, but in order to capture a more significant share of passengers, they need to offer attractive one-stop options, with a through-hub in Europe. The goal of these services should be to grab plenty of leisure traffic and connect them through the European hub. When I heard Air India was considering Milan Malpensa, I applauded the decision as the relatively large O&D would help sustain routes. But switching to Dublin will not work, because there is no demand to Dublin, and the US-Dublin market is already saturated, while Malpensa has relatively fewer flights ex. USA. The aircraft need to be large, with greater than 300 seats to achieve economies of scale. On the India side, links should be provided to Mumbai, Delhi, Chennai, and Bengaluru. And in North America, New York, Toronto, Chicago, Los Angeles, Dallas, Houston, and Vancouver. If Air India works to build theses links, they should be able to return to profitability.
A profitable national airline is a goal that all Indians would wish to see. But significant changes need to be made in the cost structure and business model. And India needs a strong Air India to fuel its aviation growth. Praful Patel also needs to realize that India needs more effective scheduling. Having banks of flights in the early morning is not convenient for the 1 billion+ Indians, simply for the 15.5 million NRIs…

Sincerely,
Vinay Bhaskara