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Saturday, June 15, 2024

Airfares from UAE may rise on India’s hard seat-sharing stance


DUBAI: India’s refusal to grant more bilateral seat-sharing rights to GCC and other foreign airlines could have a direct impact on Indian expatriates in the UAE, as they may end up paying higher ticket prices when traveling back home.

Airfares, already soaring during peak travel periods, could be even higher as airlines try to maximize revenue from available seats, aviation experts say. Indian expatriates will also have fewer flight times and routing options, leading to more travel inconveniences.

For many years, Gulf Air has been the airline of choice for Indian expatriates as they carry large numbers of passengers into India through their hubs. With the transformation of Indian airlines, especially Tata-owned Indian Airlines, India seems to be limiting the development of these airlines in India. Air India has ordered 470 new planes as it aggressively pushes into the international market by offering non-stop flights to long-haul destinations such as the US and Europe, an area long dominated by Gulf Cooperation Council carriers.

The debate over market access was reignited at an aviation event in India last week when Civil Aviation Minister Jyotiraditya Scindia said the government had no plans to increase air traffic rights for Emirates and other Gulf carriers. Instead, Scindia urged Indian airlines to regain lost traffic to Gulf carriers and other foreign airlines by pushing airlines to order more wide-body jets to meet demand.

Dubai-based Emirates, Turkish Airlines, Kuwait carrier Al Jazeera and Qatar Airways have all called for increased air traffic rights to and from India to meet rising demand. Analysts say India has swapped around 135,000 seats a week with Dubai, Abu Dhabi, Sharjah and Ras Al Khaimah in separate deals. Before Covid, Air India was using about 100,000 seats per week, while Emirates was using about 115,000 seats per week.

No respite from high ticket prices

On this issue, Linus Benjamin Bauer, founder and managing director of Bauer Aviation Advisory (BAA), said: “If the seat allocation between India and the UAE remains restricted without any increase to accommodate the growing demand, this may affect Emirati expatriates traveling to India. Capacity constraints can lead to higher fares, especially during peak travel seasons, as airlines try to maximize revenue from available seats.”

“A balanced approach is needed to create a thriving aviation market,” Ball said. This will involve liberalizing air traffic rights, investing in airport infrastructure and promoting competition while ensuring fair practices.

But all that now appears to be far from reality, as budget carrier Air India said it would stop operating flights between the UAE and peak-demand destinations such as Mumbai and Delhi as part of its plans for the summer of 2023. Instead, starting March 26, Air India’s sister low-cost carrier will only fly to secondary destinations in India from the UAE, said PP Singh, regional manager for the Gulf, Middle East and Africa networks of the two Indian carriers.

Meanwhile, flag carrier Air India will reduce flights to destinations such as Goa, Indore and Kozhikode. The Sharjah-Kozhikode route operated by Air India will also cease to exist.

Lower fares with wide-body aircraft

Air India’s decision not to fly wide-body aircraft to smaller cities could affect ticket prices. “Wide-body aircraft generally have higher seating capacity, which enables airlines to spread the cost over more passengers, potentially lowering fares. By not deploying wide-body aircraft on these routes, Indian airlines may use more Small narrow-body aircraft operate, which can lead to higher ticket prices because of lower capacity and higher cost per passenger,” Ball explained.

Full-service airlines such as Air India usually charge higher fares than budget airlines as they offer more amenities and services to their passengers. “If Indian airlines dominate routes to smaller cities with limited competition from LCCs (low cost carriers), passengers may have fewer options to buy low-fare tickets,” he added.

That being said, the impact on airfares depends on factors such as market demand, competition and overall airline strategy. “India’s aviation authorities can also encourage more competition on these routes by allowing low-cost airlines to expand their services or incentivizing other full-service airlines to enter these markets,” he added.

Is there enough room for all players?

India has one of the fastest-growing aviation markets in the world, driven by a large population, a growing middle class and growing demand for travel. In this context, Emirates chairman Sir Tim Clarke’s argument that there is room for all airlines in the Indian market makes sense.

India has announced plans to build new airports in the country’s most remote regions, while expanding capacity at metro hub airports such as Delhi and Mumbai.

Furthermore, neither Indian nor GCC airlines are at full pre-COVID capacity. Satyendra Pandey, managing partner at Aairavat Technology and Transport Ventures, said that while seat-sharing rights between India and Dubai have largely been exhausted, there is still huge potential in Abu Dhabi and Ras Al Khaimah. “Also, there are several weaker Indian airlines that have partial bilateral seat-sharing agreements, but they are not able to take advantage of them. This can be taken from them and offered to other players in the market,” Pandey said.

“In the future, I see airlines in India, especially Air India, adding direct flights and improving exponentially in terms of product,” he added. To succeed in a competitive market, you must offer a better product or offer cheaper fares. “More flights from Air India Express, and new players planning to enter the Indian market like Akasa Air and Wizz Air Abu Dhabi; this could mean competitive fares in the long run,” Pandey said.


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