Recently, Air India announced the return to Kuala Lumpur with flights between Delhi and Kuala Lumpur starting September 01,2024. The timings favour connectivity to Europe via Delhi and eliminates the need of having double daily flights like in case of Phuket or only a good one way connectivity in the case of Ho Chi Minh City. I received quite a few messages asking me to mark this under Understanding Aviation series. Instead, I decided to write another post under the series. This makes Air India, the second Indian carrier to offer flights to Malaysia, after IndiGo.
The India – Malaysia market is extremely skewed with Malaysian carriers operating over 95% of seats and frequencies between the two countries, led by AirAsia Bhd. which is making inroads to Tier II and Tier III cities in India – those which are part of liberalised bilateral rights allowing unlimited flights, as the rights to metro cities are exhausted. In 2014, AirAsia launched an Indian subsidiary in partnership with the Tata group. The remnants of that remains in the form of AIX connect today which will soon merge with Air India Express. At the time of launch, the claims included profitability in one year. Instead of growing rapidly, the entity got embroiled in one controversy over another, some of which very serious. In the end, the Tata group bought out AirAsia Bhd.’s stake.
In Nov 2018, while AirAsia India was still a Joint Venture between AirAsia Bhd and Tata group, IndiGo decided to take the AirAsia battle international and launched flights to Kuala Lumpur, from Delhi and Bengaluru. It was a smart move, because these were the two places where AirAsia Bhd. had only 4x weekly flights and could not add flights due to restrictions in bilaterals. Back then, I had tweeted wondering if it would be like Delhi – Singapore, a route which was part of its initial international offering in 2011 but had to vacate soon.
Touch Competition
AirAsia Bhd. is as ruthless as IndiGo, if not more. With fares which are extremely low and a network beyond Kuala Lumpur which attracts extensive feed from India, IndiGo was left with the Origin – Destination traffic along with trying to feed its network from Delhi to middle-east, which was much smaller in 2018 than what it is today.
IndiGo added flights from Chennai and continued the route until the pandemic struck. On the other side of the pandemic, while China remains out of bounds – Kuala Lumpur is one of the handful of places where the airline returned with minimal presence, just to keep the station operational – a single daily from Chennai.
The other two players on the route are Batik Air Malaysia (erstwhile Malindo) which has shrunk as a group and Malaysia Airlines – owned by the Sovereign wealth fund of Malaysia. Much like in other parts of the world. Over the years Malaysia Airlines has lost market share – a phenomenon seen across the world when private and low cost carriers have entered markets dominated by government owned / run carriers. Interestingly, AirAsia Bhd. started as a government fund owned carrier in the late 1990s before being privatised after being heavily in debt.
After exhausting all rights to the metro’s, AirAsia is now adding flights to the 18 points that have unlimited rights under the India – ASEAN agreement. This has seen AirAsia talk about flights to Port Blair, Aurangabad, and announce or operate flights to Guwahati and Kozhikode, amongst others.
Enemy’s enemy is a friend
In April this year, IndiGo announced that it has signed an MoU with Malaysia Airlines for a codeshare partnership and mutual cooperation agreement. The MoU will get converted to a firm agreement in due course of time. This is what I define as “Enemy’s enemy being a friend”. In the India – Malaysia sector, AirAsia’s dominance and network beyond Kuala Lumpur is hard to break for IndiGo, Malaysia Airlines can only grow as much but put IndiGo and Malaysia Airlines together, the offering suddenly grows multifolds.
In preparation for the same, IndiGo has moved its sole flight to KLIA. Pre-COVID, IndiGo operated to KLIA2 – the home of AirAsia Bhd. and the low cost terminal. KLIA is from where the full service carriers operate and is the home to Malaysia Airlines.
Ironically, IndiGo has been this messiah for Turkish Airlines where bilaterals are restricted and also for Qatar Airways, again where bilaterals are restricted. WIth Malaysia Airlines, this would be a similar story where the flights beyond Kuala Lumpur operated by Malaysia Airlines get a spurt in terms of feed. IndiGo gets a strong footing for flights from India to Kuala Lumpur. The loser? Possibly AirAsia Bhd. which will see a sudden spurt in seats on offer, possibly putting pressure on yields and the impact will not be just on the India – Malaysia sector but beyond Kuala Lumpur. Is it legal, it absolutely is. Does it circumvent bilateral rights and benefit the foreign carriers? Benefit yes, but no rules stop this type of arrangement. In the end, if it’s not illegal, it is perfectly legal. In Fact such data points will help IndiGo plan its A350 network in future, where one-stop passengers (via codeshare partnerships) can fly non-stop on the IndiGo network.
Network Thoughts
IndiGo has been steadily building its network far and wide and starting with the Turkish codeshare adding one or the other interline or codeshare. At this point, the airline has such arrangements with Turkish (Star Alliance), Qatar Airways (One World), British Airways (One World), American Airlines (One World), Air France (Skyteam), KLM (Skyteam), Qantas (One World), Virgin Atlantic (Skyteam) and Jetstar. Malaysia Airlines will be another addition to partnership with a One World carrier. Will it ever move to an alliance or will find more solace in the ability to strike a deal at will?
When the formal codeshare is put in place, I would expect IndiGo to have a barrage of flights to Kuala Lumpur, in a manner that they connect to Malaysia Airlines bank to the region and Australia. Which sectors will IndiGo choose? The strategy could be two fold. First, choosing the metros where AirAsia has limited presence and squeezing AirAsia (and Batik Air) on routes which are not their capacity strongholds. Second would be choosing those points which are not part of the India – Malaysia bilateral or the ASEAN open skies points, which means Indian carriers can start flights to Malaysia from these cities but Malaysian carriers cannot touch down in those Indian cities. With Tamil Nadu and Malaysia having a lot of historical ties, Coimbatore and Madurai would top those points in my mind. Trichy – had more flights to Kuala Lumpur, than even Delhi at some point in time.
This codeshare, if similar to the one with Turkish Airlines and not like those with American Airlines or British Airways, will allow IndiGo passengers to book to destinations in Australia, New Zealand, Japan and most important cities in ASEAN.
Tail Note
IndiGo has changed from how it began. As it invests in Business class seats and re-invents itself, these arrangements will help frequent fliers as and when the loyalty program is released. As for the partnership with Malaysia Airlines, the disappearance of MH370 is still a mystery and remains fresh in the minds of even those who are not aviation geeks. While the airline has a substantial market share, will this hamper the growth of the codeshare or these are events of the past and that won’t have an impact?
Special Note
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