Saturday, September 1, 2007

Air India

Air India has anounced that due to extremely poor load factors being witnessed on board its new nonstop BOM-JFK flights, it is reducing fares on this sector by nearly 30% to bring it in line with its other flights bound for JFK & EWR via LHR & CDG respectively. Currently AI was charging USD 1300 + taxes for the nonstop flight and has now brought it down to USD 950 + taxes which it hopes will help improve loads.

Analysis :

AI have no one but themselves to blame for this fiasco. They announced this new flight only a month before it was going to be launched and uploaded it on to the GDS reservation systems in late June thus not giving enough advance time for travel agents in USA and India to help fill the flight. Usually airlines give 3-5 months notice to travel agents if a new flight is being launched to help get advance bookings. AIs inaugural BOM-JFK flight only carried 80 passengers when the capacity is 238. Also many people would never pay an extra USD 350 just to fly nonstop in economy class from JFK to BOM compared to flying one stop via EU/UK/DXB/AUH. Yes, they would pay an extra USD 100-150 max but not $ 350! On Friday, DL and CO came up with even better prices of USD 650 + taxes as an introductory offer for their new EWR/JFK-BOM flights which will commence from this October onwards.

AI plans on launching another nonstop to JFK from DEL in January 2008 which would probably see the end of AI 101-102 which flies BOM-DEL-LHR-JFK. By having 3 daily flights from India to the NYC market (2 to JFK and 1 to EWR), I feel that is a bit too excessive for an airline of AI's calibre. I rather see them launch new long haul flights from India to niche markets in USA such as DEL-IAD nonstop with the B 77L and BOM-MAN-IAH with the B 773ER in 2008-09.

IAD-Washington DC is in desperate need for a direct same plane service to India as there is a large NRI population residing in the BWI / IAD geographical area + Carolina's + high yield traffic potential due to both IAD and DEL being the political capital cities of India and USA respectively. In addition, there is also high yielding I-T traffic on this route that can be effectively tapped.

My reasons for wanting AI to fly to IAH from BOM via MAN are varied. To begin with, no airline flies nonstop to BOM, let alone India from MAN where approximately over 300,000 plus NRI's reside and even a greater number in nearby areas of Leeds, Blackpool, Sheffield, East Midlands etc.

The same can be said of IAH-Houston where approximately 200,000+ Indians too reside in the Houston/San Antonio area where also an Indian Consulate is situated. From IAH too, no airline provides a direct or same plane one stop service to India via Europe. With the astronomical growth of the Indian middle and upper class both in India and USA, more and more of them are paying a premium to fly airlines that either offer nonstop or one stop/same plane service from their originating city to India and vice versa. These NRI's are paying premium because of the increase of their spare disposable incomes. In short, both markets i.e. MAN and IAH will see a lot of O&D traffic bound for BOM and other points in India.

On the MAN-IAH-MAN route, AI has 5th freedom traffic rights for passenger and cargo. No airline flies this trans-atlantic route nonstop which is in AI's favor. In IAH too, AI can tap into the wealthy NRI community residing there plus the high yielding premium oil /gas / energy / I-T traffic.

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