Russia-Ukraine ceasefire is bad news for Air India. Here’s why

The possibility of a ceasefire on the Russia-Ukraine front after more than three years of war has hit the headlines. While Ukraine has talked about the possibility, the ball now rests with Russia where the United States will try to negotiate and come to a ceasefire before ending the war.

Like in most cases, the give and take will extend beyond the territory and one of the major points for discussions will be the airspace availability. When the war started, the Western world closed its airspace for Russian carriers and its own airlines started avoiding Russian airspace. This meant that carriers like Finnair were celebrating flights over the North Pole with certificates meted out to its passengers; but many had to simply pull out flights or not resume them post-pandemic. The war started even as the world was grappling with the pandemic and going through multiple waves of it.

The impact was for European carriers flying to China and South East Asia along with American carriers flying to India among other places. The shortest great circle distance flight between India and the United States overflies Russia. However, the airspace usage was reciprocal. The American carriers would not overfly Russia, but Indian carriers would and that meant it was advantage Air India all along.

Getting into the pandemic, three American carriers operated non-stop to India. This included Delta Air Lines to Mumbai and American Airlines to Delhi with a flight each, while United operated a daily flight each to Delhi and Mumbai from Newark in addition to the San Francisco-Delhi flight. As things stand today, Delta Air Lines does not operate to India while American Airlines has maintained its presence, even as some of its flights had to halt for a technical refuelling stop due to headwinds. United also continued with its presence in India but operating only a third of the flights it operated pre-pandemic and pre-war.

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As things stand today, there are 65 weekly flights between India and the United States with Air India being the top contributor. Air India operates 51 out of these with flights to San Francisco from Delhi, Mumbai and Bengaluru; to Newark from Delhi and Mumbai, to New York from Delhi and Mumbai, along with flights to Chicago and Washington from New Delhi.

What could be the impact?

American Airlines had announced a flight to Bengaluru from Seattle, while United had announced flights between San Francisco and Bengaluru. If these two airlines decide to revive their flights, Bengaluru could be the highest gainer. The changed market dynamics and the growing traffic since the pandemic could entice United to reinstate the flights it had withdrawn, while Delta could return as the Delta, Virgin Atlantic, Air France-KLM combo look to gain more market share from India with every carrier except Delta among them having added flights in recent past or for short duration.

The impact could well be on Air India, which has for a long period enjoyed a dream run even as issues with planes have made it to the news time and again. The lull was possibly the perfect time for Air India to get its act right on the refurbishment front. However, supply chain issues meant that it is yet to begin the process and when it does a few months from now, it would be for the B787s, while the routes to North America see the B777s being deployed, barring one route to Washington. This would mean increased competition for Air India at a time when it is in the middle of a turnaround and would likely see a drop in some flights in summer, as compared to the current winter schedule as it has to pull out planes for refit and refurbishments.

Happy passengers?

The passengers who fly non-stop between the two countries will be a happy lot as they get more options to fly out and possibly modern planes compared to Air India. The costs would also see a dip as more competition becomes available on the route. Air India has had a strong presence in the India-US sector for a very long time and is the backbone of its Long-Haul operations and will continue to be so.

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A competition would force Air India to look at the aircraft quality, especially in the front cabins and expedite the refresh program. There have been rumours of the airline planning to launch to more destinations in the United States, which will be a welcome step for the passengers. Additionally, this will help Air India take on the competition in a better manner as it would offer many more destinations non-stop as compared to one-stop.

It would be a race against time for Air India to get its act together with respect to its aircraft refurbishment and for the negotiations to end well for a ceasefire and airlines in the US to start flights to India. India and the USA have an open skies treaty, allowing airlines to launch flights without having to wait for bilateral rights being allocated. The clock is ticking for war to end and commerce to begin.