No immediate gains seen for Indian carriers in Malaysian visa-free regime

The visa-free period becomes effective December 1, 2023, for Malaysia. (Representational image)

Early this month, Thailand started a visa-free regime for Indian tourists, who can avail of this till May 2024. Malaysia too has announced visa-free travel for Indians. This is an indicator of the growing outbound travel from India and the country’s increasing soft power arising from its rising economic power and status.

Indian aviation will not be as excited with the Malayan nation’s decision as it has been with the Thailand’s, since Indian carriers have minuscule presence on the India-Malaysia route, unlike Thailand where the distribution is more or less equal. The visa-free period becomes effective December 1, 2023, for Malaysia.

The Malaysia experience

The Indian experience with a visa-free regime with Malaysia has not been great. The country had withdrawn its scheme arbitrarily in 2010, claiming that over 40,000 Indians had used this route for illegal immigration and were not traceable.

However, unlike Thailand, Malaysia has not set an end date yet for visa-free travel. This scheme for Indians, like Chinese, will be valid for a 30-day visit. Since it is visa-free, it automatically becomes multi-entry.

Indian aviation won't benefit much

There are currently 183 weekly frequencies between India and Malaysia. A look at the schedule for November 2023, shared exclusively by Cirium, an aviation analytics company, shows that Malaysia Airlines, that country’s flag carrier, deploys 51,077 seats each way and has a 35 percent seat share of the India-Malaysia capacity. This is followed by AirAsia, with 48,186 seats (33 percent share). However, AirAsia group trump's Malaysia Airlines as its long-haul subsidiary AirAsia X also operates to India and deploys 15,212 monthly seats each way or 10 percent of the total capacity. Together, the AirAsia group controls 43 percent of the seats between India and Malaysia.

November 2023: Seats each way between India and Malaysia

IndiGo, India’s largest carrier by domestic market share, fleet and international passenger numbers, occupies the penultimate spot with a 4 percent capacity share, next only to Batik Air Indonesia which operates from Jakarta to Chennai with a stop in Kuala Lumpur and enjoys rights to carry passengers between India and Malaysia. This leaves very little room on the Indian side to make the most of the visa-free regime and the expected upswing in passenger traffic.

Entry point of Air India Express?

IndiGo had expanded its Kuala Lumpur operations with flights from Bengaluru and Delhi pre-COVID. However, it operates just one flight a day currently. Does this signal a likely beachhead for Air India Express? There is a large market out there that is known as an origin-destination market, i.e., passengers who fly from India to Malaysia and not beyond. The likes of AirAsia group and Malaysia Airlines thrive on the market beyond Malaysia and compete with Thai Airways and Singapore Airlines, while the Indian carriers can focus on the core market which involves business travellers and those visiting friends and relatives, cashing in on the closer cultural ties between India and Malaysia along with a substantial number of ethnic Indians in Malaysia.

IndiGo has its own challenges on the aircraft front with anywhere between 30 and 40 aircraft expected to be grounded, in addition to the current 40-plus planes. While the airline takes measures to ensure capacity and expansion continuation, Kuala Lumpur may not be the first destination on its mind.

So a relatively open and undefended field plays right into Air India Express’ hands. Moreover, refreshed branding, planes coming in every week, a hunger to expand and the tailwinds from visa-free entry could be the perfect launchpad for Air India Express, the low-cost subsidiary of Air India. This could then give it a head start against IndiGo, which it has had on very few routes, if at all.