Skift Take
India’s airlines punch far below their weight in the intercontinental arena. In fact, deeply troubled Air India maintains its leadership in the market. But will things change as others, including some low-cost carriers, contemplate long-haul flying?
Editor's Note: This story was first published in Skift Airline Weekly on Sept. 3, 2018.
India today has just two intercontinental airlines. One is synonymous with cost bloat and government mismanagement. The other is nearly insolvent. Why isn't anyone stepping up to challenge Air India and Jet Airways?
Well, they soon will have some challengers—if those would-be challengers are undeterred, anyway, by India's current airline sector crisis, brought on by rising fuel prices, a falling rupee and bloody fare wars on short-haul routes. One long-haul aspirant, sure enough—the LCC SpiceJet—told Mint last month it would hold off on ordering wide-bodies until market conditions at home improve, even though intercontinental flying "will eventually happen."
SpiceJet is not alone in eyeing India's long-haul market, which some see as a potential sanctuary from raging competition in the short-haul market—think back to the early 2000s, when U.S. legacy carriers embarked on major intercontinental expansions to escape pressures closer to home.
In 2018, even IndiGo—India's most profitable airline—is barely making money despite domestic demand that remains strong and an economy that's still growing rapidly. Look at next quarter's capacity plans, and you'll quickly see why short-haul yields are tumbling: Domestic seat counts will be up 14 percent year-over-year, roughly double the pace of current GDP growth, according to Diio Mi schedule data. Of India's seven major airlines, four are growing by double digits, including IndiGo itself—its domestic seat counts will rise 24 percent.
To be clear, IndiGo's intercontinental visions formulated before the current industry meltdown. The airline certainly does see value in defensive diversification, away from over-reliance on short-haul. But it's also playing offense, viewing intercontinental routes as a golden opportunity, given the liabilities of Air India and Jet Airways, and given the large pool of potential feeder traffic from its robust short-haul network. Thinking more boldly still,
