New Delhi: Emirates wants more of the Indian skies. It is looking at a 52 percent increase in the number of seats on Indian flights, from 54,200 now to 80,000 eventually.
It is already the largest international airline carrying Indians overseas and has been roundly criticised several times in the past for taking away Indian passengers which would have otherwise been flying an Indian airline.
So why does Emirates want more traffic from India, especially when the Indian government has decided against signing fresh air bilateral rights with Gulf countries?
The logic is simple. India is one of the few aviation markets in the world which is underserved and has a vast growth potential in terms of air traffic. Besides, as pointed out by Will Lofberg, Emirates' Senior Manager (Public Environment Affairs), 11 percent of Emirates' total global network capacity is deployed in India and "with no increase in entitlements since 2008 and high seat factors (84%), carriage growth has been marginal in 2011-12."
Lofberg did not confirm whether Emirates has indeed sought an increase in per week seat entitlements to 80,000 but the carrier has funded a study by the National Council of Applied Economic Research (NCAER) which says as much.
The findings of this study give out overall economic benefits which would accrue to India if the government allows Emirates more capacity from India. This study also hints at Emirates wanting four additional ports of call - Amritsar, Mangalore, Pune and Trichy. At present, it flies to 10 Indian airports.
So should Emirates be allowed to get an even bigger share of the Indian international air traffic pie than it already has?
In a policy paper released recently, the Civil Aviation Ministry pointed out that convenient onward connections and financial clout of its large airline ensure that the UAE takes away one in four international passengers who would have otherwise used an Indian airport to take onward international connections.
If we take the six airports in Gulf countries together - Dubai, Doha, Sharjah, Bahrain, Abu Dhabi and Muscat - then the traffic "leakage" - which means international passengers taken away from Indian airports by other airports for onward connections - is a whopping 5.36 million passengers every year or close to 40% of the transfer international traffic from India.
Not just the UAE, Qatar, Saudi Arabia and Oman have also approached the Ministry for increasing either the number of seats per week for their respective airlines or increasing the number of ports of call (cities from which airlines of these countries can take Indian passengers).
The Ministry officials feel this is not fair and they have indicated in the past that Gulf carriers have 7-8 points of call in India whereas Indian airlines have just one or two in these countries. The Gulf airlines are carrying a bulk of our passengers to their cities like Dubai and providing them onward connections to Europe and the Americas, hurting domestic carriers.
Kapil Kaul of CAPA begs to differ though. He points out that the government's policy on awarding air bilateral flying rights is flawed. "Before we plan bilateral, we must forecast medium- and long-term capacity requirements .... We have no clear stated objective for bilaterals."
Also, Indian airlines would be unable to handle the projected traffic growth in the coming years since they neither have financial muscle nor capacity addition plans commensurate with traffic. CAPA projections suggest that the two main Indian airlines which fly international - Air India and Jet Airways - between them have just 39-40 wide body aircraft which are functional. And over the next decade, these two airlines will add just about 47 aircraft to their fleet, which Kaul says is simply not enough to cater to overseas traffic.
The NCAER study estimates a combined economic benefit of $106 million if Emirates is allowed flights to the four new airports mentioned earlier. And if the airline is allowed to raise total seats to 80,000 per week, the Indian economy will benefit by $790 million.
As for the Indian carriers, they perhaps need to beef up their balance sheets and enhance capacity addition spends to be able to compete with the might of the Gulf carriers.
Published Date: Sep 03, 2012 15:52 PM | Updated Date: Dec 20, 2014 11:42 AM