)
Air India has been growing its operations abroad and plans to launch services to Moscow (Russia), Milan and Rome (both Italy) but it will face a big challenge in the US, with India’s grant of additional traffic rights to Dubai (the United Arab Emirates), the opening up of a US immigration pre-clearance facility in Abu Dhabi (UAE) and the US’ Federal Aviation Administration’s downgrade of the Indian civil aviation regulator, which restricts launch of new flights to that country.
Air India earns about 18-20 per cent of its revenue from the US. It has been flying to New York since 1960 and now flies there daily, along with Newark and Chicago. In fact, its New York and Chicago flights are generating a cash surplus.
At an inter-ministerial group meeting to finalise India’s position on traffic rights, Air India opposed the move to enhance the seat quota for Dubai. Air India argued that Dubai’s Emirates Airlines be allowed to fly Airbus A380 without changing seat entitlements. Disregarding the opposition, the ministry raised the entitlements by 11,000 seats a week over the current 54,000 seats.
“There will be definitely a negative impact on us,” a senior Air India executive said, referring to the grant of additional rights to Dubai. “This year, we are expecting a 20 per cent increase in revenue,” he added. In 2012-13 the airline generated Rs 12,596 crore in revenue. Between April and September 2013, the carrier reported a revenue of Rs 6,698 crore.
The Persian Gulf is the biggest revenue generator for Air India, followed by the US. Over the past couple of years competition on the India-US route has intensified, with Gulf carriers adding new flights.
Emirates, which has the highest market share on the India-US route at 18 per cent, is adding a service to Boston and Chicago this year. It also introducing a Milan-New York flight. Etihad is launching a flight to Dallas and Los Angeles, while Qatar Airways is adding flights to Philadelphia and Miami. Air India has of 11 per cent of this market.
The setting up of a pre-clearance facility in Abu Dhabi, enabling passengers to complete immigration and customs checks there, is another boost to the Jet Airways-Etihad alliance, planning to introduce flights to the US from the emirate. Abu Dhabi is the 15th city outside the US to have a pre-clearance facility and the first one outside the Americas and Europe. Media reports say that the Dubai airport, too, could get a US immigration checkpost, although there is opposition to opening up more such centres in the US.
“The Gulf carriers have multiple connections in India and the US, so they are at an advantage. These carriers also have bigger sales teams in the US. Air India’s flights to the US have been generating loads of over 80 per cent despite its fares being higher than the competition,” said a source in the airline.
THREE NEGATIVES FOR AIR INDIA
Air India earns about 18-20 per cent of its revenue from the US. It has been flying to New York since 1960 and now flies there daily, along with Newark and Chicago. In fact, its New York and Chicago flights are generating a cash surplus.
At an inter-ministerial group meeting to finalise India’s position on traffic rights, Air India opposed the move to enhance the seat quota for Dubai. Air India argued that Dubai’s Emirates Airlines be allowed to fly Airbus A380 without changing seat entitlements. Disregarding the opposition, the ministry raised the entitlements by 11,000 seats a week over the current 54,000 seats.
“There will be definitely a negative impact on us,” a senior Air India executive said, referring to the grant of additional rights to Dubai. “This year, we are expecting a 20 per cent increase in revenue,” he added. In 2012-13 the airline generated Rs 12,596 crore in revenue. Between April and September 2013, the carrier reported a revenue of Rs 6,698 crore.
The Persian Gulf is the biggest revenue generator for Air India, followed by the US. Over the past couple of years competition on the India-US route has intensified, with Gulf carriers adding new flights.
Emirates, which has the highest market share on the India-US route at 18 per cent, is adding a service to Boston and Chicago this year. It also introducing a Milan-New York flight. Etihad is launching a flight to Dallas and Los Angeles, while Qatar Airways is adding flights to Philadelphia and Miami. Air India has of 11 per cent of this market.
The setting up of a pre-clearance facility in Abu Dhabi, enabling passengers to complete immigration and customs checks there, is another boost to the Jet Airways-Etihad alliance, planning to introduce flights to the US from the emirate. Abu Dhabi is the 15th city outside the US to have a pre-clearance facility and the first one outside the Americas and Europe. Media reports say that the Dubai airport, too, could get a US immigration checkpost, although there is opposition to opening up more such centres in the US.
“The Gulf carriers have multiple connections in India and the US, so they are at an advantage. These carriers also have bigger sales teams in the US. Air India’s flights to the US have been generating loads of over 80 per cent despite its fares being higher than the competition,” said a source in the airline.
THREE NEGATIVES FOR AIR INDIA
- FAA downgrade means it can’t add flights to the US
- Abu Dhabi pre-clearance facility boosts the Jet Airways-Etihad alliance
- Extra seat entitlement to Dubai gives an advantage to Emirates
