By Jitender Bhargava
Even though Air India, as the country’s national carrier, operated its maiden international flight to London from Mumbai on 8th June 1948, when many of the present dominating airlines did not even exist, the country lost its domineering position due to multiple flawed policy decisions.
Amongst the factors restricting Air India’s growth even in its halcyon days was its government ownership. Air India remained content with its small long-haul network, covering a few destinations in Europe and the USA in the west and Japan and Australia in Asia-Pacific, besides flying to destinations in the Gulf and South-East Asia. Most Indian carriers, established after the skies were opened up in the early 1990s, also appeared to be satisfied with restricted international short-haul operations.
As the market was growing at a frenetic pace post the economic reforms in 1991, a lack of desire to seize the long-haul market, notably by cash-starved Air India, was akin to offering the market on a platter to Gulf and South-East Asia airlines. Most of these airlines owed their growth to Indian passengers.
On the threshold of a momentous phase
Is Indian aviation now on the threshold of entering a momentous phase of long-haul operations? The response to this question is an unequivocal YES!
The country it appears, is all set to regain the lost position with renewed vigour commencing 2027. It is not only Air India, now in its fourth year since Tata’s assumed control of the erstwhile national carrier, which appears to be on track to attain the larger objective of giving our country an airline that the countrymen can be legitimately proud of but also Indigo, which has finally set its sights on long haul routes.
If Air India in 2023 placed orders for 70 long-haul aircraft – 40 A350s, 10 B777s and 20 B787s – to be inducted over the next few years, Indigo too placed orders for long-haul aircraft last year for phased induction commencing 2027.
Two major developments are adding still greater impetus to the intent. While Indigo is demonstrating that the wait for 2027 for aircraft induction is too long, it has leased 6 Dreamliner aircraft to commence long-haul aircraft in a couple of months. Air India, likewise, is sending a message – the aircraft currently in its fleet and flying, new aircraft ordered in 2023 to be inducted over the next few years, would be inadequate to meet the burgeoning demand. The airline has hence already decided to purchase a substantial number of more long-haul aircraft over and above those ordered in 2023.
More aircraft ordered
Why have both Air India and Indigo become aggressive in operating long-haul flights? Has the government’s decision to end the regime of liberal grant of bilateral rights to foreign airlines spurred them into action? Or is it the belated realization that the potential for growth lies in long-haul operations, considering the tourism potential of the country and the vast Indian diaspora settled abroad?
Whatever the rationale, Indian aviation will get a significant boost when the phased induction of long-haul aircraft begins. Since carriers of Gulf and South-East Asia benefitted phenomenally in the past due to the inability of Indian carriers to harness the ever-growing Indian market, growth in Indian carriers long haul operations is bad news for them, particularly airlines which revelled in ferrying Indian passengers from various Indian cities to their country and then flying them to Europe or USA.
Notwithstanding that both Air India and Indigo are managed professionally and have financial resources to back aircraft acquisition, there are some naysayers in the industry who question whether India can afford and absorb so many aircraft. The reality is yes. The reality is that the country needs not just the number of aircraft already in operation and ordered by both Air India and Indigo for long-haul operations, but many more.
The fact that in terms of international seats per capita, India is well below large aviation markets cannot be ignored. At a penetration level of a mere 0.06 international share per capita, against 0.14 for China, 1.58 for Thailand and 2.04 for South Korea in Asia, the unexploited potential is huge. It may not be out of context to say that India seems to have currently only scratched the surface.
Air India CEO, Campbell Wilson, was recently quoted as having stated that the aircraft shortage globally will continue for the next 4-5 years. Considering this pragmatic reality and the fact that new aircraft slots with both the major aircraft manufacturers – Airbus and Boeing – have been sold out beyond 2030, is the decision of Air India to augment long-haul aircraft orders a pre-emptive measure? If it indeed is, Air India needs to be patted because an airline with an aggressive growth plan must always have new aircraft for induction in the pipeline.
With the reigning aircraft shortage, long delivery schedules and supply chain issues, as per IATA, the average aircraft age, which in 1990 was just over 12 years, averaged 13.6 years in 2019. In 2024, it further aged to 14.8 years. With supply chain problems confronting manufacturers and airlines alike, it is probable that airlines may be compelled to defer the retirement of existing aircraft and thereby increase the average age still further.
Convergence of positive factors
While all factors that lend momentum to market growth are converging viz – impressive GDP, more airports being commissioned and airlines acquiring more aircraft, there is an additional bonus by way of reduced jet fuel prices – a key cost factor for long-haul flights. Lower jet fuel prices at $20 per barrel cheaper in 2024 than in a year will help reduce operational costs.
As all operational parameters are favourable, can there be a better time for Indian carriers to mount long-haul flights and end the domination of foreign airlines? It has taken long but one can visualize that Indian carriers will begin harnessing the Indian market as a dominant player starting in 2027 with non-stop flights from numerous major Indian cities to several destinations in the USA, thus obviating the need for a stop at an intermediate country en route.
Jitender Bhargava is the Former Executive Director of Air India & Author of ‘The Descent of Air India.’
