Waiting for the connecting flight

Kingfisher Airlines’ license has been suspended and Mr. Mallya is nowhere to be found. Newspapers are pouring in a lot of ink to cover how the mighty falls. To be fair it was inevitable. There was too much capacity in the skies and irrational fares were the norm. Fares were not cost based but Air India based (Air India offered unrealistically low fares to grab market share unleashing a fare war). These are perks of a developing aviation market. What is strange however is the unwise use of the excess capacity.

Ever since the Delhi and Mumbai airports were privatized the media and the ministry of civil aviation (MoCA) rubbed two words deep in our minds. So deep that we used them without thinking what they really mean. The words were, “world class” and “hub”. Every one promised world class infrastructure, we all expected world class infrastructure, the ministry talked about turning India into a world class hub, a global hub and sometimes just a hub. India did get a lot of modern looking terminals in the past couple of years, I will leave it for the passengers to decide whether they are world class or not. But the other word, “hub” seems to elude India even after the modern terminals became operational.

Where is my hub?

A hub is an airport where people fly in from different corners of the world, change the aircraft and fly on to their destinations. A good example would be Dubai in the Middle East or Frankfurt in Europe. MoCA (irrespective of the minister in charge) always propagated the idea of turning Delhi and Mumbai into a hub. Before commissioning of the integrated terminal three at Delhi, hub operations were difficult due to two separate locations for international and domestic operations. This has been taken care of now by terminal three. Still Delhi is nothing close to a hub. Currently Delhi airport has close to 10% of its total traffic as transfer traffic. A large chunk of which is international to domestic transfer. The trend will not be much different for Mumbai either. Compared to 10% transfers at Delhi/Mumbai Dubai and Frankfurt have close to 50% transfer traffic.

City pair	Air India	Jet Airways	Emirates	Qatar Airways
LHR – HKG	0	1/1.5/BOM	2/1.5/DXB	4/1-2/DOH
LHR – SIN	0	2/12-23/BOM	4/2-3/DXB	4/1-6/DOH
LHR – SIN	-	1/12/DEL	-	-
LHR – PEK	0	0	5/3-5/DXB	4/1.5/DOH
LHR – TYO	1/10/DEL	0	2/2.5/DXB	4/2-7/DOH
LHR = London; HKG; HKG = Hong Kong; SIN = Singapore; PEK; Beijing: TYO = Tokyo; BOM = Mumbai; DEL = Delhi; DXB = Dubai; DOH = Doha
Source: Availability display from Galileo for 12 November 2012

Waiting for my connecting flight

The above table is a snapshot of connections between popular business destinations in Asia and Europe. Air India, the national carrier offers only one connection between London and Tokyo with an extremely long layover of ten hours. Jet Airways, a private airline offers four but only one with a practical connecting time. On the contrary the Middle Eastern carriers offer multiple choices with extremely convenient connecting times at their respective hub. This is how poor the hub connectivity at Indian airports is.

So what is stopping Indian carriers from taking the plunge? Well the answer lies in the poor connectivity offered by Indian carriers (as shown in the table) and a lack of stakeholder coordination (airports, airlines and MoCA). For a very long time MoCA protected Air India by holding back flying rights for private airlines, not letting them fly on profitable routes, onerous process of approvals for fleet acquisition, high taxation, etc. There is no point in discussing what benefits Air India got from all this protectionism. After several strikes and routine operational delays the airline is surviving on taxpayer’s money.

Lets do the obvious

Protection of Air India is however just one of the reasons. Indian carriers can be a bit more enterprising when it comes to network planning. As shown in the table they lack connectivity between the most obvious destinations. London-Hong Kong market for example is big enough with seven direct flights and more than 20 indirect flights, all operated with wide body aircraft. Add to this a strong origin and destination market from India (both London – India and Hong Kong – India) and the Indian carriers can easily ensure high load factors. London – Hong Kong route might look over crowded but there are other less crowded markets to be connected and Indian carriers can use the geographical location of India to their advantage. A collaborative effort of airlines, airports and the government agencies is needed, where the airline is supported by the airport in its ambition of network expansion and the government provides a level playing field minus the bureaucracy.

There is no reason why Indian carriers cannot connect Jakarta to London or Manila to Riyadh via Delhi/Mumbai. A huge political change is unfolding in India’s backyard. Myanmar is opening up and businesses all over the world are eagerly waiting to set shops there. Consultants, bankers, politicians, project managers, and their teams will swarm in once the sanctions are lifted from Myanmar. This is a great opportunity, which needs to be assessed and seized at the right time. It will be too late once Qatar Airways or Flydubai start flying there twice a day. Some of the excess capacity can definitely shifted to routes outside India.