Air India is taking a leaf out of JRD Tata’s book

Air India (AI) has announced an enhanced international presence. It will start an additional 20 weekly services to Birmingham, London and San Francisco before the end of this year.

The new flights and increased frequencies are just that: a matter of course. But AI’s decision to improve flights to the US and UK is not like that. For the selected sectors they shed light on the strategy that the Tatas are following for AI. Two things stand out immediately. This is a long term plan and it is clearly thought out.

The air travel market had recovered to almost pre-COVID levels in May of this year. Post-pandemic pent-up demand has pushed fares up on these routes. Traffic from India to the UK tends to increase during the summer holidays and remains strong during the festive season. AI’s new flights in the winter schedule will allow you to take advantage of this demand. Beyond that, an additional 14 flights to two destinations, London and Birmingham, will make AI the largest UK-India carrier on the route with a total of 48 flights per week, helping it overtake its closest competitor, British Airways, which has 42 weekly flights to five destinations in India. If Vistara, another Tata airline, is taken into account, the number of weekly flights will reach 55.

The decision to increase weekly non-stop services from Delhi, Mumbai and Bengaluru to San Francisco from 10 to 16 will also immediately translate into more revenue for the airline. As the only Indian airline to offer non-stop service from India to San Francisco, AI already charges a premium. New flights on the route will further thicken your kitty.

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In many ways, AI is following the example of the book that JRD Tata wrote when he started international flights for AI in 1948. At the time, KLM Dutch Airlines and Imperial Airways were among the two dominant players on the India-UK route. The aviation community considered JRD crazy to take on these great dads. But JRD persisted and launched the international AI flight from Mumbai to London with what was then considered a new plane: the Lockheed-749. The airline soon became an established name on the route.

What AI is doing now could also have been done when the airline was under government, as India signed an open sky agreement with the US and the UK. There were doubts at the time as there was no reward system for making forward thinking decisions. There were always fears in the minds of Air-Indians that if their decision resulted in monetary loss for the airline, they would face investigations and could be challenged by constitutional authorities such as the Comptroller and Auditor General of India.

Both India-USA The US and India-UK are multi-billion dollar air travel markets. AI’s attempt to gain more share in these two markets makes sound business sense. In 2020, just as the pandemic brought the global aviation industry to its knees, the India-US air services market was estimated to be around $7 billion. London and San Francisco, in particular, are high-yield markets where demand has remained strong.

In the India-UK market, AI offers nonstop connections from seven Indian cities to London and Birmingham, which should allow it to offer a slight premium on fares. In 2019, before the outbreak of the pandemic, India was the UK’s 16th largest market by volume and 11th by spending, a Visit Britain survey showed. It also found that the UK was the second most visited market for Indians that year. More so, Indians visiting the UK set a new record by spending around £753 million in the UK. There seems to be no let up in demand. The British High Commission in Delhi has said this year that India has overtaken China as the largest nationality receiving UK-sponsored study visas.

Over time, the additional flights will help AI amortize its fixed costs at higher volumes and leverage its fleet of wide-body aircraft, including incoming 777-200 LRs. The higher and longer a plane flies, the more chances the flight has to earn money. The India-UK flight is about nine hours. India-USA flights. In the US, they range from 14 hours nonstop to East Coast destinations like New York to nearly 16 hours to San Francisco.

The brake on demand could, of course, come from the UK and the US, which are facing an inflationary environment with the threat of an imminent recession.

In another part of Mint

In Opinion, Manu Joseph tells why the intellectuals are wrong about the rise of the right in Europe. Ankita Thakur says location data can boost enterprise in tier II and III cities. Andy Mukherjee says that India’s internet policy should not develop a chinese character. Long Story explores the possibility of a smoke free november this year.

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