By Singh, Published on March 3rd, 2022 in Blog, News
A Look at the Past & Future of Air India from Amritsar
As India’s oldest flying carrier, Air India, once again begins new innings with its original owner, the TATA group and after almost 70 years since it’s nationalization, the successful turnaround of Air India into a world-leading carrier by the TATA’s would definitely be a historical one in the history of the global aviation industry.
Air India was at one time the airline which brought Amritsar glory with regards to aviation connectivity during the 2000’s. But what opportunities does Amritsar hold now for the newly privatized carrier, with its focus on returning to profitability? And is Air India again set to return those days to Amritsar after almost a decade, under the TATA’s?
A Look at the Glorious Old Golden Days of Aviation in Amritsar
Whether it be the United Kingdom or Canada, Amritsar has always been one of the top destinations across India for these markets since the 1980s.
In the year 1982, Air India for the very first time launched direct flights between Amritsar and Birmingham with its Boeing 747 Jumbo’s. This route was said to be the one of the most popular routes for Air India during that period. However, in the mid-1984 due to various security reasons, the airline had to discontinue this route.
After about 21 years of suspension of this popular route, the airline in the year 2005 launched direct flights between Amritsar and Birmingham further connecting Toronto with its newly inducted Boeing 777s. With even an ever-developed market between Amritsar to UK & Canada during this time, the route was said to be the one of the most profitable routes for the airline in its history. The word ‘profitable’ was unfortunately a rare thing for the airline during those years as well.
In the following year 2009, with the success of Air India in these markets, the other full-service Indian carrier, Jet Airways also entered the Amritsar-UK market, and launched non-stop flights between Amritsar-London Heathrow with its state-of-the-art Airbus A330-200 aircraft. In the same year, Air India rerouted its Amritsar-Birmingham-Toronto route as Amritsar-London Heathrow-Toronto, to save its slots at Heathrow.
However, while Amritsar was staring at an ever-developing future, the dark clouds were just hovering over the horizon. In the year 2010, due to introduction of various new policies by Air India to develop Delhi and Mumbai as their international hubs, Amritsar felt a grave negative impact on its international network and air traffic development. At the end of October 2010, the Amritsar-London-Toronto route was eventually suspended and rerouted via Delhi.
Air India’s Hub Policy: Turning Profitable Routes into Loss Making?
In the year 2013, Air India re-entered the Amritsar-UK market, but this time with new routing via Delhi. As a result, the new route economics didn’t turn out to be in the favor of the airline. The Amritsar-Birmingham-Toronto route which was an exceptional route for Air India between the years 2005 and 2008, was rerouted as Amritsar-Delhi-Birmingham. After route changes, just in the first 10 months of the FY2014-15, the airline reported a loss of over Rs.125 crores on this route, as reported by Hindustan Times (HT) in a news report.
Interestingly despite the loss of nearly $21.5 million than on this route, this was one of the least loss-making routes for the airline. The report by HT also stated that the airline during the same time period, reported a loss of over Rs. 150 crores or about $25.8 million than on Delhi-Rome/Milan routes, Rs. 300 crores or about $51.7 million than on the Delhi-Melbourne/Sydney routes, while on Ahmedabad-Mumbai-Newark route the loss was over Rs. 430 crores or about $74.1 million than.
While Air India wanted to emerge out as a large international network carrier flying of its hubs in Delhi and Mumbai, it could be said that they had to pay a huge price for this decision. The point-to-point routes, including the Amritsar-Birmingham-Toronto route, which was said to be the one of the most profitable for the airline, were eventually axed due to the introduction of its Hub & spoke policy.
The Low Yield Dilemma
In the year 2018, Air India re-launched non-stop flights between Amritsar and Birmingham, while in the following year, the airline also launched non-stop flights to London Stansted from Amritsar. While it has been reported in various aviation media portals that these routes are more of ‘Government Routes’ rather than ‘Business Routes’ for the airline, probably because of the ‘low yields’ despite the huge demand, but it is rather a dilemma. Their so-called dilemma of low yield passengers from Amritsar.
For example, while several aviation media portals have reported in the past that the average base fare for one-way travel to Amritsar from London is just about $158, but the main point which no could focus on is that Amritsar never got the opportunity to get both directly or even one-stop connectivity from any elite UK air carrier with higher Cost Available Per Seat Kilometer (CASK).
In the year 2019, several airline carriers including, Uzbekistan Airways, Qatar Airways and Air India served the Amritsar-London market of over 106,000 with one-stop connectivity via their respective hubs. One of the most common things among all these carriers is that they all have much lower CASK as compared to British Airways or Virgin Atlantic, which does not even serve this market with direct or one-stop connectivity.
“For better understanding of some markets, you need to go beyond the data available, to have a much clearer look of that market.” ~ Ravreet Singh
Will Amritsar win Confidence of TATA’s?
While Air India is now flying under a highly experienced management, a number of industry experts expected the axing of non-stop routes from Amritsar to London and Birmingham, but it seems that the TATA group is fully confident about business potential from Amritsar.
As per the latest schedule available on Air India’s website, the airline in the Summer Schedule 2022 would now be increasing the frequency of its non-stop Amritsar-London Heathrow flights from present 1x weekly to over 3x weekly. While the bookings of 1x weekly non-stop Amritsar-Birmingham flights are available as well, it is also expected to be increased to atleast 3x weekly flights.
The continuation of these routes also signifies that Amritsar truly holds strong business opportunities. For some unique markets like Amritsar, one can only utilize these opportunities if the airlines have a perfect knowledge and ground understanding about it.
Future Opportunities
During the past 2 years during the COVID-19 pandemic, Amritsar has not just proven its business potential for UK and Canada but also emerged to most potential destination in India for Italy as well. Yes, you read that correct, not even Delhi, Mumbai or Bengaluru, but low-key Amritsar has proven to be the most potential destination for Italy in India as well during the past 2 years.
As Air India expands its fleet and network in the near future, Amritsar could emerge out as an important secondary international hub in Northern India after Delhi, for connecting to several North American as well as European destinations, including, Toronto, Vancouver, London, Birmingham and Rome.
It would not be wrong to say that the entire North American and a large share of European market of Punjab is presently completely dependent upon Delhi, which approximately made about 60% of Delhi’s entire North American and European market in the year 2019.
Ravreet Singh is a 17-year old blogger with an avid interest in aviation business. His ultimate goal is to become an Airline Business Professional. He possess good research, analytical and strategy skills, along with knowledge about various aspects of commercial aviation. He is also the youngest team member of FlyAmritsar Initiative, a public advocacy campaign for better air connectivity & sustainable development of Amritsar.
March 3, 2022
Siloni Arora
When you have a dream, you’ve got to grab it and never let go.” …
March 3, 2022
PERMINDER BHATIA
Excellent written