Etihad Boosts Presence in Changing Indian Market

United Arab Emirates (UAE) national carrier Etihad Airways has announced plans for a major increase in capacity and flights between Abu Dhabi and India as it strengthens its network ahead of the expected approval of its investment in local carrier Jet Airways.  All regulatory clearances for Etihad to buy its 24 per cent stake in the Indian carrier are expected to be in place within the next couple of weeks after a previous August 31, 2013 deadline was extended.

From November 1, 2013, Etihad plans to more than triple the number of seats it now offers on the prime Abu Dhabi – Mumbai and Abu Dhabi – New Delhi routes, reflecting the growing importance of the Indian market. Enriching the expanded schedules will be new connection opportunities between Etihad’s global network and its expanded Indian services, via the airline’s Abu Dhabi hub, while a Jet Airways codeshare will be added.

“India is one of the world’s fastest-growing destinations, and a key market in the growth strategy of Etihad Airways,” said James Hogan, president and chief executive officer, Etihad Airways.  “Following the recent signing of a new air services agreement between India and the UAE, we now have the opportunity to add significant capacity between the two countries, not only meeting existing demand for trade and tourist travel but also ensuring that we can meet the continued strong growth which is expected between our two countries.

By December 31, 2013, Etihad plans to increase from daily to double-daily its Abu Dhabi-Mumbai and Abu Dhabi-New Delhi flights; use a wide-bodied Airbus A340-600 on one of the daily Abu Dhabi – Mumbai flights, offering First, Business and Economy Classes; use wide-bodied Airbus A330-200 aircraft on one of the daily Abu Dhabi - New Delhi flights, offering Business and Economy Class; and upgrade daily Abu Dhabi – Chennai flights from 136-seat Airbus A320s to new Airbus A321s, seating 174 passengers.

An analysis of flight schedules for October 2013 shows that Etihad has just a 1.9 per cent share of the Indian international market, considerably less than its Middle East hub rivals Qatar Airways and Emirates Airline which hold 3.9 per cent and9.2 per cent shares, respectively.  This network expansion will enable it to better compete with its rivals for the strong onward connection traffic via the Middle East gateways.

The expansion of Etihad’s presence in India follows the approval of Foreign Direct Investment (FDI) in the Indian airline sector and has already resulted in the formation of two new airlines in partnership with AirAsia and Singapore Airlines (SIA), although the involvement of Tata Sons in both ventures has lead local analysts to suggest there could be a conflict of interest.

The AirAsia India low-cost venture is already a long way down the road and has already received the green light for its incorporation, although it is still waiting on final approvals to launch operations, with a December 2013 inauguration still planned.  However, news last week that Tata Sons were to link with SIA to establish a full service operation in India could impact the budget venture, with local media reporting that the third shareholders in AirAsia India, Arun Bhatia, was “shocked” to hear the news of the Tata-SIA deal and has already offered to buy the carrier’s 30 per cent stake.  Meanwhile, AirAsia remain tight-lipped on the matter.

While AirAsia India will be Chennai-based, the as-yet unnamed venture between SIA and Tata Sons will operate from New Delhi International Airport and will operate in a completely different marketplace, namely serving the full-service business.  “It is Tata Sons’ evaluation that civil aviation in India offers sustainable growth potential,” said Prasad Menon who has been nominated by Tata Sons as Chairman of the start-up.  “We now have the opportunity to launch a world-class full-service airline in India.  We are delighted that we are partnering in this endeavour with the world renowned Singapore Airlines,” he added.

SIA and Tata Sons have now have signed a Memorandum of Understanding and applied for Foreign Investment Promotion Board (FIPB) approval to establish the new airline that they say will “help further stimulate demand for air travel”.  Subject to FIPB and other regulatory approvals, it will operate as a joint venture with Tata Sons owning a 51 per cent and SIA a 49 per cent share.  Details of the airline’s branding, management team and products and services will be announced in due course.

“We have always been a strong believer in the growth potential of India’s aviation sector and are excited about the opportunity to partner Tata Sons in contributing to the future expansion of the market,” said Goh Choon Phong, chief executive officer, SIA.  “Tata Sons is one of the most established and respected names in India.  With the recent liberalisation, the time is right to jointly bring consumers a fresh new option for full-service air travel.  We are confident the joint venture airline will help to stimulate market demand and provide economic benefits to India.”

In the table below we highlight the largest carriers in the Indian domestic and international market based upon schedule data from October 2013 from OAG Analyser.  In the domestic market IndiGo dominates but when you incorporate all of its subsidiary businesses Jet Airways is a close second.  The latter is also the dominant carrier in the international market from India, ahead of national carrier Air India.

SCHEDULED AIR CAPACITY IN THE INDIAN DOMESTIC AND INTERNATIONAL MARKET (non-stop departures; October 2013)

Domestic Market

International Market

Rank

Airline

Available Seats

% Capacity

Rank

Airline

Available Seats

% Capacity

1

IndiGo (6E)

2,303,820

28.7 %

1

Jet Airways (9W)

322,025

13.5 %

2

SpiceJet (SG)

1,515,762

18.9 %

2

Air India (AI)

297,809

12.5 %

3

Air India (AI)

1,410,052

17.5 %

3

Emirates Airline (EK)

219,852

9.2 %

4

Jet Airways Konnect (9W)

1,264,259

15.7 %

4

Air India Express (IX)

104,799

4.4 %

5

Jet Airways (9W)

859,458

10.7 %

5

Qatar Airways (QR)

92,438

3.9 %

6

Go Air (G8)

608,608

7.6 %

6

Air Arabia (G9)

79,704

3.3 %

7

Air India Express (IX)

64,798

0.8 %

7

IndiGo (6E)

78,120

3.3 %

8

Jet Lite (S2)

5,580

0.1 %

8

Singapore Airlines (SQ)

71,179

3.0 %

9

Thai Airways International (TG)

2,980

0.0 %

9

Saudia (SV)

69,201

2.9 %

10

Air Mauritius (MK)

2,796

0.0 %

10

Thai Airways International (TG)

67,713

2.8 %

TOTAL

8,038,113

-

TOTAL

2,387,725

-


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