The India-US air traffic market has become a game of chess, with each player making moves that surprise the opposition, and in this case, passengers as well. Air India has announced the launch of non-stop flights between Bengaluru and San Francisco and would thus pre-empt United in connecting the two IT hubs.
United, one of the top three US airlines, had announced the launch of flights in September. The flights become operational in May next year. Not only this, but the airline will also offer a non-stop service between Hyderabad and Chicago, a route that has been offered as a one-stop via New Delhi for ages. This has been the same aircraft service unlike the Bengaluru-Delhi-San Francisco route, where the Bengaluru-Delhi route was operated by a narrow body as an international connector — a concept unique to Air India
Air India launched services to San Francisco in 2015 and has since become one of the most sought-after routes in the airline’s network, where it has added frequency and fended off competition.
The India-US non-stop market is fast becoming a duopoly between Air India and United, with American Airlines and Delta having failed in the past and United’s current foray being on hold due to the raging pandemic. The game of one-upmanship between Air India and United now sees Air India arriving late at the announcement party but becoming the first off the block on the route.
The duopoly
While both United and Air India are part of Star Alliance, the two co-operate little when it comes to the India-US sector and instead have a cut-throat competition. From being present at Newark, New York and Chicago a few years ago to adding Washington and San Francisco, Air India is the largest carrier on this non-stop market by seats deployed.
United, on the other hand, was restricted to Mumbai and New Delhi from Newark and has since started flights to New Delhi from San Francisco and upgraded its aircraft to Mumbai and Delhi.
Air India seems to have hit a jackpot of sorts at San Francisco, for it has never increased frequency in such quick succession at any other points in the US or Europe. While United focusses on the US connections to get traffic on the route, Air India has been a popular carrier for VFR (Visiting Friends and Relatives).
Choice of equipment
While United intends to operate the B787-9 Dreamliner between San Francisco and Bengaluru, Air India has no option but to operate the B777-200LR, the only aircraft in its fleet capable of performing the mission. Touted as gas guzzlers in the past, the airline has only three B777-200LR aircraft in its fleet.
The Hyderabad-Chicago route could operate with B777-300 aircraft, 13 of which are with the airline.
Why Now?
Domestic aviation is limping back in India and the country has closed international services on a regular basis, keeping it restricted to air bubbles. India and the US have a longstanding open skies agreement, allowing airlines from both countries to add as many flights, and the same has continued in the air bubble arrangement as well.
India-US traffic is high-volume and lucrative, and European, Asian and Middle Eastern airlines have vied for a slice of this large pie. However, with the air-bubble arrangement not allowing connecting traffic, non-stops are suddenly very lucrative for the airlines.
In data submitted to Parliament early this year, Air India had stated that in terms of the number of routes making money at total cost, EDIT and EBITDA, international ones saw a higher percentage of routes being positive at total cost and cash-positive level compared to domestic ones.
Tail Note
The current situation allows Air India to attract traffic due to lack of options, taking away choices such as timings, product, alliance and others. This will definitely help Air India shore up its shrinking balance sheet and ensure that the international routes look attractive as it continues to be on the block after repeated extensions.
This also shows the nature of the market and how it has changed since the pandemic raged — from American Airlines announcing the first US non-stop from Bengaluru, to leaving the queue, to United taking that spot, and now Air India taking it up.
The TSA (Transportation Security Administration) needs an airport to be cleared from a security perspective it is to have a non-stop flight to any point in the United States. Air India would be able to open reservations for the flights when the process is complete.
What will help both Bengaluru and Hyderabad airports is that they already have a one-stop flight to the USA, which operates as an extension of non-stops from Delhi and allows immigration at these two airports.
(Ameya Joshi runs the aviation analysis website Network Thoughts.)
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