Today, India, for the size that it is, has only four airlines that fly international: Full service carriers (FSCs) Air India and its subsidiaries, and Jet Airways, and Low cost carriers (LCCs) SpiceJet and IndiGo. This is in contrast to the 10 airlines that operate domestic scheduled services in India, today. While Indian carriers flew 81 million domestic passengers in calendar year 2015 (CY2015), Indian carriers flew only 18 million passengers in the same period.
Only two airlines/airline groups operate short, medium and long haul international services: Air India and Jet Airways. Both airlines have diverse fleets: from short haul domestic ATR 72 turboprops to long haul international Boeing 777s. The LCCs in contrast have narrowbody jets that can cater only to short haul international services.
Due to the limitations of fleet and perhaps the lack of commercially attractive international destinations, LCCs IndiGo and SpiceJet deployed only 4.8% and 9.5% of their total flights on international, in CY2015. In contrast, Jet Airways (Including operations from the Jetlite AOP) deployed 22.1%, while Air India (Including Air India Express and Air India Regional (Alliance)) deployed 32.7% of its total flights on international. Air India and Jet Airways together contribute to 84.5% of all international departures by Indian carriers, while IndiGo and SpiceJet contribute to just 8.8% and 6.8% respectively.
This statistic shows IndiGo and SpiceJet are very small players in the international front, serving destinations at neighbouring countries. IndiGo operates only to five international destinations: Kathmandu (Nepal), Muscat (Oman), Singapore (Singapore), Bangkok (Thailand), and Dubai (U.A.E.), while SpiceJet operates only to six international destinations: Bangkok (Thailand), Colombo (Sri Lanka), Dubai (U.A.E), Kabul (Afghanistan), Male (Maldives), and Muscat (Oman).
Air India and Jet Airways started operations before the 5/20 rule was instated in the year 2005. IndiGo and SpiceJet started operations after the 5/20 rule was introduced. The 5/20 rule requires airlines to operate domestic services for a minimum period of five years, after which it can fly international only if the airline has a fleet size of 20 or greater.
Air India Express was the only airline to start immediate international operations (although on an AOP different from Air India) after the 5/20 rule was introduced. The first flight of the airline was an international flight.
Neither IndiGo nor SpiceJet fought the 5/20 rule at that time as the focus of both airlines then, as it is today, is to tap the potential of the domestic market. SpiceJet started international operations in October 2010, while IndiGo commenced international operations in September 2011. Despite both LCCs having started international operations nearly five years ago, when the scale of domestic operations were smaller, both airlines chose not to focus on international operations. (See IndiGo’s fleet induction, here) Both airlines always had the option of inducting larger aircraft to serve destinations beyond the surrounding Asian and Middle East countries. But such is not their business model.
As a result, the only Indian carriers to majorly serve international are Air India and Jet Airways, both of which were not ‘victims’ of the 5/20 rule, whereas IndiGo and SpiceJet, which chose to focus on domestic even though they started international operations five years ago, are ‘victims’ of the 5/20 rule, strongly opposing the removal of the a rule that means nothing, and does not impact either airline..
Go Air started operations in the year 2005, but chose not to increase its fleet beyond 19 aircraft. It deferred its 20th aircraft, which was readied by Airbus. As a result, the airline does not fly international, and seems to have no issues remaining a domestic player. Yet, the airline opposes the removal of the 5/20 rule, though it chose not to operate international.
In the quarter ending 31st December 2015, a total of 12.6 million international passengers were carried by both Indian and international airlines. Of that number, Indian carriers flew just 4.5 million passengers, or just 36% of the total traffic.
India is underutilising its bilaterals, due to restrictions placed by rules such as the 5/20. For the purpose of this case, and for want of time, we consider only three international destinations: Singapore, Bangkok, and Kuala Lumpur.
As of late February 2016, there are three airlines from Singapore that operate to 13 destinations in India. Singapore Airlines, Tiger Airways and Silk Air together operate 134 flights per week to India, from Singapore, and an equal number of return flights. Together, the airlines deploy 30,517 seats per week between Singapore and India, in each direction, using a variety of aircraft: Airbus A319s, A320s, Boeing 737-800s, Airbus A330s, Boeing 777-200s, 777-300s, and Airbus A380.
In contrast, three Indian airlines (four if you count Air India Express separately) connect Singapore to only four destinations in India. Air India, Air India Express, Jet Airways and IndiGo together operate 63 flights per week between the two countries. Together, the airlines deploy just 13,244 seats per week between Singapore and India, in each direction, using Airbus A320s, Boeing 737-800s, Airbus A330-300s, and Boeing 787-8s.
Thai Airways, Thai AirAsia, and Bangkok Airways operate from Bangkok to eight destinations in India, flying 73 flights and deploying 19,497 seats per week, Using Airbus A320s, Boeing 747s, 777-200s, 777-300s, Airbus A330-300s, and Boeing 787-8s.
In contrast, SpiceJet, IndiGo, Jet Airways and Air India together operate 62 flights, deploying 12,474 seats per week, from four Indian destinations to Bangkok, using Airbus A320s, Boeing 737-800s, 737-900s, and Boeing 787-8s.
From Kuala Lumpur, AirAsia Berhad, AirAsia X, Malindo, and Malaysian Airlines operate 180 flights to 12 Indian destinations, deploying 32,903 seats per week between Malaysia and India, using Airbus A320s, Boeing 737-800s, 737-900s, and Airbus A330-300s.
In contrast, only Air India Express operates to Kuala Lumpur, connecting only Chennai to the Malaysian capital with 4 weekly flights and deploying 744 seats per week.
While not all destinations are commercially viable, there is a huge mismatch between the capacity deployed by foreign carriers, and the capacity deployed by Indian carriers, on the same set of routes. Infact, the superior connectivity offered by foreign carriers is not matched by Indian carriers, leaving a large scope for more Indian carriers to boost the Indian economy while also providing international passengers seamless domestic connectivity.
The 5/20 rule must go if India should see it’s own airlines connect India with the rest of the world.
What the FIA won’t tell you
The Federation of Indian Airlines (FIA), have something against the airlines of the Father of Indian Aviation (FIA), Late JRD Tata. The Tata’s have already done enough to promote connectivity within India: TATA airlines was renamed Air India.
The FIA (Federation) is shaken by the prospects of airlines such as Vistara and AirAsia India. The goal of the FIA is to restrict the operations of such airlines to within India, so that players like the market leader can use its low cost base to lower fares on every route such airlines fly, and bleed the airlines dry. Starting with the smallest and the least capitalised airlines, airlines will knock off the Indian scene, one by one, leaving only a few to operate in India, with the market player enjoying a huge monopoly in setting fares. At that point in time, India will suffer, with neither good international connectivity, nor with strong domestic competition nor worthy alternatives.
While the FIA blames consultancy firm KPMG of auditing Singapore Airlines and consulting for the government, it remains silent on consultancy firm CAPA.
CAPA India, in its Aviation Outlook 2016, stated, “Despite repeated statements by the Minister that there is no logic to the 5/20 rule and that it should be abolished, the discriminatory regulation still remains in place”.
Guess which consultancy firm’s services was sought for IndiGo’s Red Herring Prospectus? CAPA India.
Three days after securing its Air Operator Permit (AOP), Vistara opened for bookings, for flights 9th January 2015 onward. This marks the start of commercial operations in Q4 FY2014-15, a period which is traditionally the second weakest season for Indian domestic travel.
The airline places itself as a full service carrier (FSC), with a three class cabin.
Rows 1 – 4 feature a four abreast Business Class Cabin with 16 seats. The seats sport a 42-inch seat pitch, with a 7-inch recline. Business class passengers will be pampered with a meal service with fine linens and bone china tableware. Meal options – for all classes – are shown on the left. Business class passengers will have a separate check-in counter at airports. Passengers are entitled to 30kgs check in and 7kgs carry-on baggage. Fares are in two categories – Business Flexi and Business Saver, with the expensive former waiving off a change fee while allowing the ticket to be valid for 12 months.
Rows 5 – 10 feature a six abreast Premium EconomyClass Cabin with 36 seats. The seats sport a 33-inch seat pitch, with a 4.5-inch recline. This cabin section includes two emergency exits at rows 9 and 10. These rows offer a 36 inch legroom, but the recline is unavailable on row 9 and perhaps restricted on row 10 due to the cabin partition wall right behind. Passengers are entitled to food and beverage. Premier Economy class passengers will have a separate check-in counter at airports. Passengers are entitled to 20kgs check in and 7kgs carry-on baggage Fares are in two categories – Premium Flexi and Premium Saver, with the expensive former waiving off a change fee while allowing the ticket to be valid for 12 months.
Rows 11 – 27 feature a six abreast Economy Class Cabin with 96 seats. There are only 16 rows in this section, but the row numbering skips the number ’13’, misleading one to believe there are 17 rows. The seats sport a 30-inch seat pitch, with a 3.5-inch recline. The seat thickness will determine the actual legroom available. For example. IndiGo’s 29-inch seat pitch with its ultra slim dragonfly seats are thin enough to offer the equivalent of a 31-inch seat pitch legroom with standard seats. Passengers are entitled to food and beverage. Economy class passengers will have a separate check-in counter at airports. Passengers are entitled to 15kgs check in and 7kgs carry-on baggage Fares are in two categories – Economy Flexi, Economy Saver, and Economy Super Saver, with the expensive first option waiving off a change fee while allowing the ticket to be valid for 12 months.
In addition, passengers who have web-checked in will have a separate counter to drop off check-in baggage. The airline also offers an auto check in service, in which if the passenger has not self checked-in at 4 hours prior to scheduled departure time, the airline will auto check the passenger on the flight and send the boarding pass via SMS or email.
In total, every aircraft is configured with 148 seats.
The lower number of passengers and dedicated counters may check in a smooth experience. Being a FSC, load factors may hover around the 75% range, leading to just 111 passengers per flight, on average – possibly a smooth boarding experience.
Vistara’s IATA code is ‘UK’. On the first day of Operations – Friday, the 9th, January 2015, the airline will operate only on the Mumbai-Delhi and return sectors. Vistara’s regular flight numbers are expected to start with ‘9’. However, on January 9th, the airline will operate two flights to Mumbai from Delhi and one flight to Delhi from Mumbai, all with special flight numbers – 895, 890, and 228. Flights to and from Ahmadabad will commence the next day, on the 10th of January. With this, one aircraft will be stationed at Mumbai.
The first commercial flight will be operated as UK890, which Departs Delhi at 12:30IST and arrives at Mumbai at 14:45 IST.
The airline will commence operations with two aircraft, both Airbus A320-232SL, registered VT-TTB and VT-TTC. The airline will operate the following patterns from 10th January, with the first pattern for an aircraft out of Mumbai and the second for an aircraft out of Delhi. The pattern holds good for most days, with certain changes on Sunday. Reportedly, the pattern will run till 15th February 2015.
The airline will operate from Terminal 2 of Mumbai’s Chhatrapati Shivaji International Airport, and Terminal 3 of Delhi’s Indira Gandhi International Airport.