Could the escalating India-Canada relations derail expansion plans of airlines?

India is the fourth-largest market for Canada, but Air Canada has not been able to mount additional flights as it has to avoid Russian airspace since February 2022, while Air India flies over Russia.

The last three days have seen India-Canada relations going down with each passing day.

It started with the Canadian government expelling an Indian diplomat, followed by an Indian tit-for-tat. Next step saw advisories being issued by both countries, with India upping the ante in its advisory, by including the whole of Canada.

What do the advisories say?

The Canadian government issued an advisory to its citizens on September 18, 2023, which asked its citizens to “exercise a high degree of caution” across India and avoid all non-essential travel to north-eastern states and avoid all travel to Jammu and Kashmir and border areas with Pakistan.

The Indian government came up with an advisory for its citizens, urging all Indians to exercise extreme caution in Canada, in view of the politically condoned hate crimes and criminal violence in Canada.

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These may not have an impact immediately for those planning the yearly shift of base from Canada to India for winters, but this will definitely impact tourism to Canada. Indians have been expanding their horizons for tourism as the middle class expands.

Bilateral trade

Trade between the two countries has been growing consistently over the last few years, barring the COVID years. Yet, as a total trade percentage, it is negligible.

India exported goods worth $4,109.75 million in 2022-23, which stood at 0.91 percent of the total exports of the country. India’s imports from Canada were at $4,051.29 million, which is 0.57 percent of the total imports. There has been a growth of 18 percent in total trade over the previous financial year, shows data released by the Ministry of Commerce.

How about air traffic?

In this backdrop, let us look at the flights that are connecting these two countries. Flight connectivity is already hit by the war in Ukraine and the Russian airspace not being used by western carriers, while Air India continues to use Russian airspace. All carriers actively avoid Ukrainian airspace for the risk it carries.

Estimated numbers show that over 6,00,000 passengers travelled between the two countries last year. In the second quarter of 2023, direct flights carried 82,309 passengers to India from Canada, while over 91,000 passengers flew to Canada from India. This does not include the number of passengers who fly one-stop via multiple hubs in the Middle East, Europe and Asia.

Air India operates a daily flight to Vancouver and Toronto from New Delhi while Air Canada operates a daily flight to New Delhi from Toronto and four weekly from Montreal to New Delhi. Air Canada operated to Mumbai via London. It is not operational at the moment but resumes this winter.

Winter is the high season for the route when NRIs spend time in India to avoid the harsher climate of Canada and they return to Canada before summer starts in India.

The number of People of Indian Origin (PIO) in Canada has been going up significantly in the last few years, leading to the demand for more direct flights. The Bilateral Air Services Agreement (BASA) was last revised in 2022, which makes it open skies. India is the fourth-largest market for Canada, but Air Canada has not been able to mount additional flights as it has to avoid Russian airspace since February 2022, while Air India flies over Russia.

Tail Note

For Air India, Canada is just one piece in its large puzzle. It would have a lot of plans to increase flights to Canada from New Delhi as well as add flights from other points in India.

Similarly, the airline would want to add flights to new destinations in Canada, like Montreal. The current incidents may hold it back. No other airline from India has the readiness or aircraft to serve the India - Canada market non-stop.

As for Air India, there are so many opportunities on offer right now that a small blip in the overall plan will not impact its deployment. It could strengthen the operations to the US, in the meanwhile, with similar aircraft in its fleet, which have the range to fly non-stop to North America.

As for passengers, the current situation is unlikely to lead to a breakdown of ties to an extent that flights will be stopped like it has been to war-torn countries in the past. Hence it is safe to book tickets if one is travelling or intends to.