A few days ago, AirAsia Bhd launched its second daily flight to Colombo, the capital of Sri Lanka. There is considerable traffic between Kuala Lumpur, the hub of AirAsia Bhd. and Colombo with expat Sri Lankans as well as those with Sri Lankan origin settled in Malaysia. Sri Lankan people are settled in few other regions too, like Australia. As Air Asia X, the sister arm of AirAsia gets capacity back – it is relying on more feed for its long haul network. At a time when SriLankan Airlines is struggling, pulling passengers is easier and the south asian market definitely is driven by prices to a large extent.
As Air India expands, it will have to focus on these cities and treat them as satellite cities to its hub to effectively snatch away the traffic from the middle eastern carriers on one side, low cost carriers on the other and everything else in between. The likes of Dhaka, Chittagong, Colombo and Kathmandu have enough traffic to capture, but not enough to warrant a direct flight to the USA or multiple destinations in Europe. The traffic currently depends heavily on the hub carriers and post Jet Airways – which had a sizable presence at few of these places, no other carrier has warmed up to the idea of developing these airports as effective spokes.
Air India has a game plan in place. It will increase flights to the US and Europe multi-fold, starting with adding new flights to existing destinations like it has done right now, followed by adding new destinations from its Delhi hub. This would ideally lead to the second phase of strengthening these new destinations from Mumbai and Bengaluru. This is where the importance of neighbour’s comes into play. Deploying flights to add base to these newer hubs being established.
As the Tata’s pump more money into Air India and the airline venture consolidates, there is weakness around. Thai, Srilankan, Biman and AirAsia are not in the best of financial health coming out of the pandemic. The kind of capacity which Air India is set to add is not replicable by the neighbourhood in as much time and this sets Air India in a dominant position like never before.
The volumes have to start building, the yields will follow should be the mantra rather than chasing yields which will take a long time to come up since the likes of Middle eastern carriers will be hard to overtake in terms of both hard and soft product. Let’s hope Indian aviation in general and Air India in particular reaches a stage where the Indian carriers push the Indian government to renegotiate bilateral rights and ask for more seats, the same way middle eastern carriers push their governments for a renegotiation with India! The tagline may well be from Onida, but Tata’s can definitely aim to be “Neighbor’s envy; owners pride!”
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