This post was first published in Bangalore Aviation as a part of a guest post titled Three-way Analysis: How does Emirates respond to Jetihad? written in collaboration with Devesh Agarwal and Vinay Bhaskara of Bangalore Aviation. This blog has been enhanced with their insight of the Indian aviation industry and government dynamics.
The Indian
government has the knack of making interesting decisions like encouraging Air
India to dump prices to gain market share causing mayhem in the market place
and increasing Air India’s losses or Allowing Air Asia to invest in Indian
aviation by approving a JV with the Tata and Bhatia group, creating an LCC that
will put pressure on Indigo and SpiceJet. The latest was quadrupling the number
of seats between India and Abu Dhabi which will benefit mostly Jet Airways and
Etihad or Jetihad.
In a Bangalore
Aviation recent blog (http://www.bangaloreaviation.com/2013/04/infographic-airline-wise-share-of.html
) on International Traffic Share in and out of India showed Jet Airways share
at 16.01%, Emirates at 13.04% and Etihad at 1.95%. The India market is
important to the GCC carriers it provides feed to MENA, Europe and North
America, a market that is being developed by these carriers with a station
starting almost every month, the latest is Qatar Airways to Philadelphia. The
latest India/UAE bilateral will almost double the allocated per week seats of
Jetihad over Emirates.
Dubai has unofficially asked for a doubling of the per week
seat allocation but requested an increase from 54200 to 72400 seats per week.
Emirates can opt for an FDI in one of the LCCs and collect
the prize of added capacity, an unlikely option after their earlier experience
with SriLankan.
One option is for Emirates to code share with one of the
large domestic players like Indigo or SpiceJet in order to increase its India feed and
encourage them to operate into Dubai. Emirates currently code share with Jet
Airways on the Mumbai and Delhi daily flights to Dubai. Flydubai flies only to
three destinations Hyderabad, Ahmedabad and Lucknow and would like to increase
its India destinations (which is less than 2% of its capacity). Flydubai is capable
to fly to smaller secondary airports providing feed to Emirates through the
link on their respective websites.
Code sharing is a short term solution. Ultimately, the real
solution has to be through the India-UAE bilateral. Emirates needs the
increased capacity for itself and Flydubai. Emirates can leverage Dubai’s
position as a global hub and destination for Indians. Indians are the top
expatriate investors in Dubai property (9 Billion AED) and the UAE is the
second trading partner of India and has billions of dollars in investments. Add
to the mix, almost two (2) million NRIs living in the UAE, a good proportion
affluent. Dubai can also leverage its stature in the UAE to push the boundaries
of the bilateral. Jetihad has shown that Air India and indeed the airline
industry interests can be put aside by the government if the stakes and overall
benefits are framed correctly.
