New Delhi: When the Airbus A380 that Kingfisher Airlines Ltd flew in on Sunday, 6 May 2007, takes off for its home in France on 9 May, the rest of India’s airlines will probably heave a sigh of relief.
Locked in bitter price wars, they have had to suffer through the non-stop free publicity earned by the United Breweries Group-owned airline as the world’s largest passenger aircraft—the monster, the super jumbo, the behemoth—flew lazy circles over the Capital, TV news cameras and enthralled plane-watchers in tow.
But just months after this A380 leaves, others—belonging to Singapore Airlines Ltd, UAE-based Emirates and Saudi Arabia-based Etihaad Airways—will start flying in and out of India, each one carrying more passengers for lower prices than the competition.
Flight of fancy: Neighbourhood dwellers watch as the Airbus A380, the world’s largest aircraft, lowers its wheels prior to touchdown at the Indira Gandhi International Airport in New Delhi on Sunday, 6 May 2007.
The plane, designed and built by Airbus, a unit of European Aeronautic and Defence and Space Co., is by far the biggest passenger jet in the world, with a price tag of about $300 million (Rs1,230 crore), and a capacity for fitting in as many as 850 passengers.
Its biggest competitor, in size and range, is the Boeing 747 family of aircraft, which was first introduced in 1969, and has long been the workhorse for major international airlines. While the delays around the A380’s production have been controversial, airline analysts around the world agree that it is the first major revolution in the aviation industry in the last two decades.
And so, while it remains unclear exactly how many of these flights will eventually service India, the introduction of this aircraft to the Indian skies, but by foreign airlines, threatens to change the aviation landscape for India’s airlines, especially on the extremely lucrative Gulf routes, where Emirates and Etihaad are most likely to deploy their A380s.
Emirates plans super-luxury first- and business-class compartments, while Etihaad has spoken before about a sardine-can model—pack in as many economy seats as possible and become the budget carrier of choice for the two million non-resident Indians who shuttle between the Gulf and India each year.
The hardest-hit will be the government-run airlines, Indian and Air India, which currently have a monopoly (among Indian carriers) on the routes. As the government opens up those routes in January 2008, Jet Airways (India) Ltd’s fledgling international operations will be forced to compete with the very profitable and cash-rich Emirates and Etihaad, two of the fastest-growing airlines in the world. The Gulf region, despite intense price competition, has been a cash cow for the state airlines in the last three years, during which no other Indian airline could fly to the Gulf, earning a combined revenue of Rs3,218 crore in 2006, up 13% from Rs2,836 crore in 2004, according to figures presented in Parliament last week by the ministry of civil aviation.
Those revenues make up just a fraction of the earnings that airlines have generated from these routes, so lucrative that Emirates got the UAE government to work out a bilateral with the Indian government which doubles the number of weekly flights it currently flies to New Delhi and Mumbai, and substantially increases its allotments to Kochi and Thiruvananthapuram. SriLanka Airlines, which is 43.6% owned by Emirates, currently flies about 100 flights a week to India, ferrying passengers to Colombo, and then onwards to the Gulf.
On routes between India and the Gulf, or between Singapore and the west coast of the US, airlines tend to have intensely high load factors, with planes flying close to 90% full during peak season. It is on these long-distance, high-density routes that the A380 is designed to provide the biggest cost efficiencies, often outmatching the Boeing aircraft that Jet Airways and Air India will be flying.
It’s here: The first Airbus A380 to fly into India sits on the tarmac after landing at the Indira Gandhi International Airport in New Delhi.
Under current regulations, Kingfisher can’t fly internationally for another three years—its five A380s don’t arrive till 2011.
But right now, no Indian carrier, other than Kingfisher, has shown any interest in buying the aircraft. (They are not alone—the plane has only 156 orders, and no American carrier has ordered any either.)
“It is one of the great engineering achievement of this decade... The sheer size is so gigantic,” said G.R. Gopinath, managing director of Deccan Aviation Ltd’s Air Deccan, who flew in from France on the aircraft’s route-testing to New Delhi. “It’s unimaginable that humans can build such a large aircraft.”
But Gopinath won’t buy any, and neither will Jet Airways nor Air India. “The decision (to buy A380) will depend on our existing order and the market forecast,” said Air India chairman and managing director V. Thulasidas. A senior management team of India’s recently merged national airlines is currently looking into fleet acquisition post-2011—until then, their 111 spanking new aircraft, including the Boeing 787 Dreamliner, will be their bulwark against competition.
But Jet Airways and other airlines may have to take a long hard look at the efficiencies the A380 offers if they want to compete successfully against Singapore Airlines and Emirates, said Kapil Kaul, an aviation analyst with the Sydney-based Centre for Asia Pacific Aviation.
“It has strategic implications especially for the hub-and-spoke based models in the long run,” he said. The hub-and-spoke model allows airlines to use smaller aircraft to connect to major hubs, from where larger aircraft carry passengers to final destinations. All of the international airlines that fly into India carry passengers to destinations in Europe, Africa and the Americas by using hubs such as London, Dubai, Vienna, Brussels or Paris.
For Airbus, this is a great chance to show off a plane that seems to generate non-stop buzz, if not non-stop orders. Kiran Rao, executive vice-president (marketing and contracts), Airbus, had earlier told Mint that though the company does not expect any new order for its large aircraft this year, it hopes there would be more buyers in the coming years as airlines mature.