IndiGo's seven-city move, data from smaller airports show a shift in Indian aviation industry

Darbhanga airport

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IndiGo sprang a surprise earlier this month when it announced seven new stations, all in smaller cities, including Leh, Darbhanga, and Agra. Some of the destinations, including Kurnool and Bareilly, will be connected by air for the first time.

For an airline that has never followed the herd, the announcement and the timing led to many a discussion in the industry. "IndiGo is known to take its time to make doubly sure of a route. There have been instances where it has taken slots at airports but has waited to start services until it's 100 percent sure of the route," says Nripendra Singh, Industry Principal, Aerospace, Defense & Security Practice, Frost & Sullivan.

Interestingly, this time though, the country's largest airline is yet to get regulatory approval or slots for these destinations. As Singh points, IndiGo is looking at the future and ensuring that as traffic builds in these tier 2 and 3 cities, it doesn't have problems in getting slots in these small airports.

Competition is not very far. IndiGo will directly square off with SpiceJet in Darbhanga and will compete with all or some of the other peers such as Vistara, Air India, and GoAir, on routes like Leh and Rajkot.

Does it all mean that Indian aviation is gravitating away from the metros, which otherwise had been the norm till COVID-19 struck? Ever since domestic flights resumed in May last year, routes connecting metros to tier 2 and 3 destinations have got more traffic, than even a Delhi-Mumbai - traditionally the busiest in India, and among the top 5 in the world.

"Smaller destinations have picked up post-COVID-19 as people want to reduce travel time and want to travel mostly on a direct flight, they are ready to spend more money to reach their destination," says Nishant Pitti, CEO, EaseMyTrip.com, an online travel agency.

Data from the OTA has shown routes to destinations such as Patna, Varanasi, and Srinagar making up for most of the top 10 busiest routes in the country since May. Even in December, by when airlines could deploy 80 percent of their capacity, half of the top 10 routes were those to the tier-2 cities.

"This trend will sustain," adds Pitti, signaling that it's not just reverse migration post the pandemic that is at work. "We are seeing many first-time travelers nowadays. These travelers will then have the habit, or will prefer, flying instead of railways/buses," he says. That may especially hold if airfares, which was have been down, remain favorable.

There is another interesting trend that is emerging, and it's nearly eye-popping.

Smaller airports already at pre-COVID-19 levels

A cursory glance at the data from the Airports Authority of India shows that aircraft traffic in airports in as many as 15 tier 2 and 3 cities have already surpassed, their pre-COVID-19 levels. These are numbers for November 2020.

These include cities such as Gorakhpur, Belgaum, Dimapur, Pantnagar and Ludhiana. Two more, Bikaner and Tezpur, have reached pre-COVID-19 levels. Some of these airports, including Hindon, are served under the regional connectivity scheme, or UDAN.

The highest growth has been in Jagdalpur, in Chhattisgarh. The airport, served by Air India, saw a jump of 222 percent in aircraft movement. Air India's Alliance Air operates flights from Jagdalpur to Hyderabad.

Dimapur in Nagaland saw a 170 percent increase in aircraft movement. IndiGo, Air India, and its unit Alliance Air operate flights, connecting Kolkata, Guwahati, Imphal, and Delhi, to Dimapur.

On the other hand, the aircraft movement in the biggest airports has dropped. Overall aircraft movement in Delhi was down 38 percent, while in Mumbai, it had dropped by 44.6 percent.

New airlines and airports

The trend has seen two airlines taking off at the start of 2021. These are Flybig, which started off from Indore on January 3. Similarly, Air Taxi took off from Hisar on January 14.

Flybig's business plan is centred around the government's UDAN scheme, which encourages establishing air connectivity in tier- 2 and 3 stories and town. It also helps that new airports are being opened up. Hisar is one. Sindhudurg in Maharashtra may also open in January.

Does it all mean that regional connectivity has finally taken off? After all, in 2018, three out of the four regional airlines that had started off to make the most of the UDAN scheme were close to shutting down.

To be sure, traffic between metros is beginning to improve. The Delhi-Mumbai route is again back at the top of the chart. But with business travel impacted, and customers across segments looking to reduce travel time, the COVID-19 pandemic may have made all the difference.