By Ameya Joshi
In mid-December, IndiGo announced flights to Ayodhya – its 86th domestic destination. Within days, Air India Express announced flights to Ayodhya. In the recent past, Air India Express has stepped up the pressure on IndiGo on more than one occasion with flights on routes that broke the IndiGo monopoly, largely in southern peninsular India.
Since the acquisition of Air India by the Tata group, the focus has largely been on Air India and its transformation but when it is time to take on the might of IndiGo, Air India Express – its low-cost subsidiary and which has been profitable in the past, is taking up the mantle. This, even as the merger between AirAsia India and Air India Express continues as an ongoing affair after sunsetting the AirAsia India brand.
AirAsia India started with much fanfare in 2014. A break-even within the first year and a promise to take on IndiGo were just some of the announcements which veered off in thin air. Instead, the entity found itself in one controversy over another which also reached the door of the Tata’s.
A growth like never before
Air India group is expecting the delivery of one aircraft every six days. The group will possibly beat IndiGo’s best-ever delivery rate in 2024. For Air India Express, the delivery translates to 50 planes in 15 months – a growth the airline has never seen before and had less than 30 planes when Air India was taken over by the Tata’s.
This heavy and fast induction plan would mean that the airline has to expand rapidly, both on domestic and international routes. As it does so, does it have the recipe to take on IndiGo? The new vibrant Orange branding starting with the website has given Air India Express – the much refreshed look.
The four pillars of Ovens, Streaming, Loyalty and access to a larger Air India group network could be the turning point for Air India Express.
Ovens
AirAsia India always had hot food on offer, but that could not be a differentiator due to its small network. IndiGo, on the other hand, has been consistent with its product and thought of not having ovens which add extra weight and kept itself away from hot meals. This has meant that be it a corporate traveller or individual, short-haul or longer flight – the passengers have had to make do with cold food or instant food.
If the rebranded airline can communicate about food and have pricing which remains closer to or cheaper than IndiGo, Air India Express has a winner at hands here with IndiGo not having any chance of matching the offering since it lacks ovens in its planes.
Streaming
As IndiGo plans longer flights with its narrowbody aircraft, one of the pertinent questions that gets asked is about the charging points or streaming. How does one sit for so long without any entertainment? If the passengers get enough on their phone, there are no charging points.
The revamped website of Air India Express shows streaming services named Airflix which mentions discounts on purchases, inflight menu, streaming and games amongst others. When the service is available across the entire fleet, this will become a service differentiator which would be difficult for IndiGo to match overnight.
Loyalty Points
The Tata group came up with a loyalty app for the entire group. Named Tata Neu, the low cost carrier was one of the early entrants. Air India (and Vistara) have their own loyalty programs and with codeshare flights, passengers would get to earn points.
Traditionally, India has been loyal to low fares barring a small percentage of passengers. Yet, loyalty cards have been flaunted by everyone. A simple-to-understand program could do wonders to attract passengers – especially since the current program is across the Tata group of companies.
Access to Air India network
The Air India Express and Air India routes are being segregated based on demand and route profile. However, on some of the routes there have already been co-operation and interline or codeshare agreements in place. This means that a passenger flying Air India Express has access to the wider international network of Air India via its existing and upcoming hubs – something which the rivals can’t match.
Tail Note
IndiGo’s upcoming loyalty program is an open secret, which will counter Air India Express to an extent. On the other hand, the combined reach of Air India and Air India Express on international routes far outweighs that of IndiGo. Even with the multiple codeshare and interline agreements that IndiGo is getting into, the benefit of transfers in a single terminal at Mumbai and Delhi gets a leg up for the Air India group.
The investments by the Air India group in ovens, loyalty and streaming need to see returns – where passengers pay incremental revenue for what is on offer, else taking on IndiGo will take a back seat and the focus will shift on recovering the investments. The battle with Air India group finally will see IndiGo get a formidable competitor in Indian skies and the result would hopefully be in favour of the passenger.
The question now shifts to finances. Over the years, IndiGo has built a perfect model, hawkish on the overheads, keeping costs as low as it possibly can. Air India Express may not be able to reach the costs of IndiGo very soon but then can it attract some premium so that it moves closer to breakeven and looks at profitability in the near future. The group would be ready to burn cash to gain the market before it can command a premium, keeping in mind that it is not an endless game.
Ameya Joshi is an aviation analyst & columnist who runs the analysis website Network Thoughts
