Indian carriers lose ground in international travel as foreign airlines gain traffic amid airspace disruptions, higher fuel costs and a sharp Gulf concentration
International traffic from India dropped 10 per cent in the first quarter of the financial year, data released by regulator Directorate General of Civil Aviation shows. The drop has had an uneven impact, with foreign carriers carrying even more traffic than before while Indian carriers scaled back due to airspace issues, increased fuel prices and concentration of network to the Gulf region.
The April-to-June quarter is one of the good quarters for Indian aviation, with tourist traffic firming up during the school holidays. A shrinking of traffic in this quarter does not bode well for the Indian aviation industry, which has been facing turbulent times for a while.
Indian carriers losing out
Indian carriers carried 27 per cent fewer international passengers this year, compared to last, while foreign carriers carried 6 per cent more. The split of international passengers between Indian and foreign carriers also changed drastically. Last year, 46 per cent of the international traffic from India in the April to June quarter was carried by Indian carriers, which dropped to 37 per cent this year.
Akasa Air was the only Indian carrier which carried more passengers than last year, with an increase of 26 per cent while IndiGo was down by 15 per cent. The fall was led by Air India Express and SpiceJet, both down 51 per cent and 56 per cent, respectively.
More from BusinessWhile the shrinking of SpiceJet is attributable to its internal challenges and financial issues, Air India Express had nearly 80 per cent of its international capacity mapped to the Gulf and had to be scaled back after the West Asia conflict started. Air India shrunk 27 per cent on the back of increased fuel prices, west asia conflict but also due to the scale backs done last year after the AI 171 crash.
Some of the beneficiary airlines were Azerbaijan Airways, Egypt Air, LOT Polish, JAL, Vietnam Airlines, Lufthansa and KLM, which offered alternatives to Europe as well as North America.
Metro airports hold on
The 10 per cent drop is not similar across the board, with most metros holding on to the traffic while the smaller airports are bearing the brunt. Amongst the six metro cities, Kolkata was the only city to see an increase in international air traffic, while Delhi remained flat (-0.1 per cent). Bengaluru saw a drop of 3.9 per cent, while Mumbai saw a drop of 5.3 per cent, followed by Chennai at a drop of 7.9 per cent. Hyderabad lost the most amongst the six metros, with international traffic down 10 per cent over the same period last year. Hyderabad’s significant connectivity with the Middle East and the lack of demand during the April to June period were the primary reason for this drop.
A large chunk of the lost flights and thus passengers were from Tier 2 cities like Goa-Dabolim (-69 per cent), Goa Mopa (-42 per cent), Surat (-86 per cent), Amritsar (-29 per cent), Coimbatore (-29 per cent), Kozhikode (-30 per cent), Jaipur (-43 per cent), Ahmedabad (-20 per cent), Lucknow (-20 per cent), Mangaluru (-24 per cent), Kannur (-61 per cent), Chandigarh (-81 per cent), Indore (-93 per cent), and Pune (-54 per cent). A significant number of these cities have had limited connectivity restricted to a handful of flights, and even one flight going away takes away a large chunk of capacity and thus passengers, leading to a massively higher number in percentage terms.
Tail Note
Air India is bringing back a significant capacity starting September; however, October will see the end of widebody operations for IndiGo. International flights are often seen as a huge opportunity for Indian carriers to increase utilisation, earn in foreign currency which helps hedge the sliding rupee and, more importantly, snatch away traffic carried by foreign carriers via hubs in the Middle East and Europe. This opportunity looks huge on paper but has had limited success. Jet Airways had a large-scale international network but, for a long period, also depended on income from leasing out widebody aircraft to other carriers.
The opportunity coupled with elevated prices of oil and airspace closures around India gives a reality check to Indian carriers, where the passenger traffic is driven not entirely by cost but also by connections, preferences for airports and ease of landing at the last destination in the country, which often needs partnerships which price a ticket competitively.
Over the next two years, Air India would have a significant number of refurbished planes and new additions while IndiGo starts inducting its A350s. While the two airlines start pushing for more market share on the international routes, will this foray be profitable?
Ameya Joshi is an aviation analyst.
