 "Sean Doyle")
British Airways needs a liberalised air services agreement between the United Kingdom and India so that it can operate more flights to Mumbai and Delhi, its chief executive officer (CEO) Sean Doyle said on Friday.
Moreover, he said that the current fares on India-UK flights are much higher after the pandemic because of high fuel costs and inflation, and they may come down as competition rises among the airlines.
India and the UK had in 2017 signed an "open sky" air services agreement under which there are no limits on flights between Indian cities (except Mumbai and Delhi) and the British cities. However, flights on the UK-Delhi and UK-Mumbai route still have certain limits.
British Airways currently operate 54 flights per week connecting Mumbai and Delhi with London. Virgin Atlantic operates 42 flights per week connecting Mumbai and Delhi with London, according to aviation analytics firm Cirium. Between these two carriers, the entire allocation under services agreement has been used.
"Mumbai and Delhi are subject to air services agreement. I think as demand grows, and as the economy develops, it is very important that the air services agreement keeps pace with that," Doyle told reporters during a press conference.
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"I think we would like to see what we can do within the confines of the existing (services) agreement. But, I think, ultimately, we should have pretty liberalised air service agreements to allow development of direct services," he added.
A few months back, the Indian Civil Aviation Ministry rejected Emirates' request to expand the air services agreement between India and Dubai. India wants domestic carriers like Air India and IndiGo to expand their international presence.
When asked what kind of frequencies British Airways wants to operate on London-Mumbai and London-Delhi routes, Doyle replied: "I don't have a view on it just yet. I would seek headroom for expansion in the years ahead."
He said that aviation is a catalyst for growth. "When we launched flights to Austin, Texas, in 2013, we did a huge amount of work in connecting the tech communities in London and Austin. There was an explosion of activity and trade because we were flying directly to Austin. So, aviation is an enabler for foreign direct investment. Expanding direct frequencies is always something that the policy (on services agreement) should consider," he noted.
Development of direct services in and out of India would have to be enabled by expansion of reciprocal flying rights to the markets where people want to go, he said. "That is how the other markets have developed. Ultimately, they moved to fully liberalised arrangements (with no caps on flights). That is the sort of evolution we see in the other markets and that is what we expect to see here (in India). That is for policymakers to decide," Doyle noted. British Airways currently operates 96 weekly flights between India and the UK.
Also on Friday, the carrier opened ‘CallBA’, a new call centre located in Gurugram with 1,400 employees working in it. This call centre will service customers in the US, Europe and the Asia Pacific. In 2019, the call centre services -- in the old office -- in India had about 700 employees.
When pointed out in the post-Covid-19 era, the one-way fare on India-UK routes is higher than the return fare that was there before the pandemic, he replied: "The costs are higher. Fuel price is higher than in 2019. High inflation has been in the news. We have to recover our costs to run a profitable business."
"What you will see is that as the flight networks rebuild, the competition will become intense. The consumers will have options and the fares will become competitive," he added.
He also suggested that the benchmark for fares has itself changed as it is 2023-24 now. "We probably have to re-baseline where we are starting from because we would normally have four years of fares going up. We are capturing that to an extent (in our current fares) but fuel prices are higher than they were in 2019," he mentioned.
British Airways currently has a codeshare partnership with Vistara. In a codeshare partnership, each carrier on its distribution system can sell seats of other’s flights.
Is British Airways worried about the drop in customer experience as Vistara is currently in the process of being merged into Air India, which has been suffering from lower service quality? "What Vistara and Air India do is pretty much their remit. We are obviously engaged in wherever they take it. I think partnerships are important but actually building our own proposition into India is something that animates me more."
"We will have to wait and see on Vistara. We have a partnership with them that works. We have a partnership with Qatar Airways that really works. We are very agile in this space. Just because a merger is happening does not mean that the partnerships can not sustain," Doyle noted.
When asked if Go First's insolvency points to some structural issues in the Indian aviation sector, he replied: "I think one of the things that the airline will really need to do is to make sure we recover financially from the pandemic."
"People have taken debt in the course of the pandemic and I think a way to deal with it is to run a profitable and viable business. That requires you to be very disciplined about your cost and capacity, and also be very agile on where you fly to," the CEO added. He said British Airways is really focused on being profitable and reducing our debt.
