Gulf Carriers Pursue India’s Market

Air Transport


Aviation Week & Space Technology Jan 11 , 2010 , p. 37
Neelam Mathews
New Delhi

Gulf carriers woo Indian passengers as a strategic market linked to the West
Printed headline: Targeted Entry

With lower fares, newer aircraft, inexpensive hotel packages and what some regard as better service, Middle East carriers are gobbling up market share in India at the expense of local and European competitors.

The Middle East carriers are using their hubs in Dubai and Abu Dhabi in the United Arab Emirates, and Doha in Qatar as waypoints to seat Indian passengers bound for Western Europe and the U.S.
An introduction by Emirates of Airbus A380s on its Dubai-Paris route would increase pressure on Air India. Credit: EMIRATES

Without the Middle East push, Indian passengers would more likely have booked on Air India, Jet Airways or Kingfisher from their own country, or on one of the big European carriers with a major presence in India, such as Lufthansa.

International traffic into India has jumped from 14.5 million passengers per annum in 2004 to 30 million last year, so keeping tabs on the market is important for international carriers.

One analyst monitoring this trend is Shashank Nigam, CEO of Singapore-based SimpliFlying, an airline branding consultancy. He notes that Emirates now leads in number of passengers to the Indian subcontinent from Canada, while Etihad Airways is attracting customers by using short-cycle turnarounds in travel deals.

The 184 weekly frequencies Emirates operates from India represent 21 more than it offered in February 2009. The UAE-based carrier saw bookings from New Delhi to London rise 14% in fourth-quarter 2009. It accounts for about 16% of all bookings from New Delhi to New York and 49% from New Delhi to Dubai.

International carriers are noting the challenge but are not sure how to respond. “We won’t be able to push them [Gulf carriers] out of the market,” says Lufthansa board member Karl Ulrich Garnadt.

The German carrier’s strategy seemed to rely heavily on its close alliance with Air India to help turn the tide, but ever since its merger with Indian Airlines, Air India has struggled to meld their information technology systems and has not been able to join the Star Alliance; Lufthansa was Air India’s sponsor.

Membership in Star would have provided all affiliates with seamless bookings into Air India’s home network and shaved transaction costs. It also would have helped Air India and Luft­hansa stare down the flood of capacity that Persian Gulf carriers have unleashed in the region.

For example, a round-trip economy-class ticket from New Delhi to New York is $1,050 on Emirates via Dubai and $1,155 on Etihad via Abu Dhabi. But on either Lufthansa or Air India—both transit through Frankfurt—it is $1,445, and on Jet Airways, $1,300.

And though Continental Airlines has the advantage of a direct flight to New Delhi from Newark (N.J.) Liberty International Airport, its economy ticket is $1,665.

“With attractive fares and special packages, we do see a lot of U.S. and Euro­pean traffic flying Emirates,” says airline Vice President Orhan Abbas from his office here.

Since most carriers flying from ­India to the U.S. use a hub, the Middle East ­carriers do not suffer from the necessity of a touchdown in their home countries.

But stopovers also are not necessarily a disadvantage for flights into Europe for passengers originating in secondary cities because they would have to fly to an Indian hub on an ­Indian carrier.

“It is more convenient to transit in Dubai than any Indian metro,” says Nigam. “Emirates, for instance, flies to 91 destinations in 55 countries with short convenient connections.”

India’s skewed bilateral arrangements are partly to blame for Middle East carriers dumping excess capacity into India. From 2004 through 2009, their capacity in the region grew 85% without a corresponding response from Indian carriers.

Over the past year, India’s Ministry of Civil Aviation has restricted additional access to the national market by foreign carriers. But in the 2010-11 season, the government will be under greater pressure from other nations to relax this policy because air services are increasingly tied with broader economic and trade agendas under recent bilateral agreements, according to Kapil Kaul, the Sydney-based Center for Asia Pacific Aviation’s chief analyst for India and the Middle East.

For example, Qatar Airways has gained an additional 10,000 weekly seats as part of trade talks. This push for more seats into India is likely to continue for other Middle East carriers, says Kaul.

Emirates is offering 53,364 seats a week to India and is entitled to 4,836 more. As its fleet of Airbus A380s grows—seven now, with 15 expected by November—it is considering whether to put them on its New Delhi route in time for the Commonwealth Games here in October.