Airlines eye Middle Kingdom

RED STAR OVER INDIA - IV

With both the Indian and Chinese governments agreeing to a full fifth freedom last month, the doors have opened for Indian carriers to tap the lucrative US west coast market through the Middle Kingdom as well as tap China's growing tourism market.

This will give Indian carriers the ballast to challenge established foreign carriers like Singapore Airlines and Cathay, which have picked most of the India-US traffic, commanding a 65 per cent market share both for the west coast and for North America, for decades.

Under fifth freedom rights, airlines from one country can land in another country, pick up passengers from there and fly to a third country. China has allowed Indian carriers to fly from there to three destinations of their choice to the US West Coast.

The outbound market of 400,000-odd Indians who travel to China annually is attractive. Roughly 100,000 of these are leisure travellers, a market that is growing by at least 15 per cent a year and could grow faster if there were more direct connections from India to China.

Also 70 per cent of the traffic from the west coast of US to Asia goes to either China or India, making it another lucrative arena to tap.

Jet Airways, for instance, is expected to fly Mumbai-San Francisco via Shanghai flights in May this year. The carrier also plans a second hub in the region.

For Jet, the US operations via Shanghai make much better commercial sense as the market is growing at a much faster pace than the other mature markets to Europe and south east Asia.

"For us it makes sense to offer the San Francisco product, which will provide connectivity to the US west coast in the shortest possible time allowing savings of an hour and a half for passengers," said Wolfgang Prock Schaeur, CEO, Jet Airways.

The Mumbai-Shanghai direct flight also makes sense because Mumbai accounts for 37 per cent of the Indians who travel to China. The airline will have daily flights and deploy 777-300 ERs on the route. It is also in talks with Chinese and some other carriers for a code-sharing agreement.

Other private carriers like Vijay Mallya-promoted Kingfisher Airlines awaiting permission to fly international flights are also keenly looking at a similar route.

"Shanghai as a destination is under evaluation. We have reviewed the data and feel the market is of great value to Indian carriers, thus we are interested in flying this route. It is a high-yield market and, therefore, makes commercial sense for us", said Hitesh Patel, executive vice president, Kingfisher Airlines.

Experts agree that China could become the next big thing. Said Kapil Kaul, CEO, (Indian sub-continent and Middle East) Centre for Asia Pacific Aviation: "By and large there is a huge China-India traffic and also significant China-US traffic. Jet will have the first-mover advantage but you will soon see competition on this route from Cathay, Emirates and Lufthansa apart from other domestic carriers that will enter soon."

Most Indians who travel to  China from India fly either via Singapore or Hong Kong, but with direct flights planned by Indian carriers this is going to change.

Air India is looking at tapping that market and plans to fly directly to Beijing. It has already dropped the Bangkok stopover from one of its Mumbai-Delhi-Shanghai flights.

Travel agents also say the west coast market from China is underserved and that provides new opportunities also.

Said Ajay Prakash, secretary, Travel Agents Federation of India, "Currently there are few airlines flying from Shanghai to the US west coast, most of them are Chinese carriers (Shanghai Airlines and Air China) and of course there is United Air Lines, the US carrier. Jet can capitalise on that."

So how are the big boys Singapore Airlines and Hong Kong based Cathay Pacific responding to the quiet changes?

Singapore Airlines has formidable control of the west coat market "" it operates 46 weekly flights to four US destinations (New York, Los Angeles, San Francisco and Houston) from Singapore and has 57 weekly flights from eight Indian destinations to Singapore which are conveniently timed to be connected to the US  flights.

"The India-US market is an important market for us. We get a healthy mix of both corporate as well as leisure traffic to and from US destinations. In terms of bookings from India to the US, we are still seeing strong demand. We feel that there is enough room for everyone. Singapore Airlines has created a niche in the 'travel-in-style' sector," said C W Foo, general manager, India Singapore Airlines.

For airlines like Cathay Pacific Airways the US is the second largest market from Hong Kong and the airline picks up substantial India traffic to North America through  Hong Kong. For the time being they are also not worried. "There is enough demand for the US for all the airlines to service the sector," said Tom Wright, general manager, India Middle East, Africa and Pakistan.

The airlines has announced more flights from India and its sister airline Dragon Air too has expansion plans for India operations.

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