Domestic carriers close in on their intl rivals

Domestic airline companies Jet Airways, Kingfisher and Air India are starting to overtake international carriers on certain key global routes and challenge their decades of domination.

Data available from international aviation consultancy Centre for Asia Pacific Aviation shows that Kingfisher and Jet, which have a combined 40 per cent share of weekly capacity on the India-Hong-Kong route, now offer the same number of seats as Cathay Pacific, the official airline of Hong Kong.

Add in Air India with a 10 per cent capacity share and Indian carriers are offering more seats than Cathay on this route.

Similarly, Singapore Airlines' long-standing domination of the lucrative India-Singapore route is also under pressure. Singapore's flag carrier and its sister airline Silk Air's share of the weekly capacity on this route (46 per cent) is just a few percentage points more than the Indian carriers - Kingfisher (7 per cent), Jet Airways (12 per cent) and Air India (24 per cent) put together.

Neither Cathay nor Singapore Airlines replied to emails.

The trend is not limited to south east Asia. On the UK-India route, Jet Airways and Kingfisher have a combined 31 per cent share of the weekly capacity closing in on to British Airways, which has dominated the market.

Add in Air India (with a 21 per cent share) and Indian carriers have already overtaken British Airways and Virgin Atlantic (5 per cent) combined in terms of capacity share on the route.

India's share will only get bigger once SpiceJet enters the fray from June to fly south east Asia and south Asian countries and Kingfisher recently receiving permission to nearly double its international flights to locations like London and Singapore.

London, Singapore, Hong Kong, Bangkok and Dubai account for 40 per cent of the international aviation market from India.

Aggressive pricing, new aircraft and help from the government which has frozen permission to foreign carriers to add capacity in India for nearly a year have allo helped ensure Indian carriers can become forces to reckon with.

Of these, pricing has been a key factor. "Air fares of domestic carriers flying overseas are approximately 10 per cent cheaper than international players, so that is a big plus," said Bhawna Aggarwal, founding vice president of Yatra.com, a travel site that tracks international flights.

"They also provide seamless internal connectivity across all key cities and towns in India because of their large network, which foreign carried don't have," she added.

A Jet Airways senior executive admitted as much. "We are preferred because we offer a huge network to flyers within India since we connect 64 destinations.  We also provide a network for traffic from south Asian countries to Europe," he said.

Aggarwal also said domestic carriers flying overseas tend to attract Indian consumers that also use them within the country to earn their loyalty points.

According to yatra.com sales trends Indian carriers have substantially increased their presence with over 30 per cent share of the tickets sold in the Singapore, Bangkok and Dubai sectors.

Kapil Kaul, who heads CAPA's operations in India, said Indian carriers' growing presence on key international routes was prompted by the slowdown in domestic travel.

"With domestic travel falling, airlines like Jet and Kingfisher deployed a part of their domestic capacity on international routes so that they could improve the utilisation of aircraft like the 737 or A-320. They flew to south east Asia, west Asia and Saarc, taking advantage of unused bilateral rights," he pointed out.

Industry experts say in the last 12 months Indian carriers shifted about 10 per cent of domestic capacity to international routes. This has put pressure on foreign carriers. "Of course it has put pressure on foreign carriers especially because domestic carriers are offering a world class product and service with a new aircraft," Kaul added.

Airlines insist they have been able to woo customers because of their service quality. Prakash Mirpuri, vice president, Kingfisher Airlines, said, "Our product and pricing is premium and our service and quality of aircraft is better than our foreign competitors. And consumers are ready to pay the price."

Rising capacity does not, however, mean domestic carriers have won the battle in the international skies. One key weakness is the lack of an international network.

For instance, 80 per cent of India-Dubai traffic is "throughput traffic", meaning most passengers catch connecting flights to other destinations from this hub. For Singapore and Hong Kong, the percentage of throughput travellers is as high as 40 to 50 per cent.

"Obviously foreign carriers can take advantage of the better margins on throughput traffic sincet hey charge a higher fare on the onward journey," said Kaul. "So while the India-London fare is cheap, London- New York is higher and the margins better. Indian carriers do not have this advantage."

Industry experts say the good news is that ticketing yields have been improving over the last two or three months because the market is expanding again and is expected to grow by 12 per cent in the next financial year.