Booming trade, air traffic between India and the USA
By Anand Kumar
WHEN the Airbus A380, dubbed the ‘green giant,’ flew into Delhi – and later Mumbai – last week, it attracted thousands of curious onlookers in both the cities, most of who were struck by its sheer size. The A380, the world’s biggest aircraft, arrived nearly 40 years after the Jumbo jet – the venerable Boeing 747 – landed in India.
While the arrival of the Airbus brought work at both the airports to a standstill (with passengers, airport employees and airline staff rushing to catch a glimpse of it) the new aircraft also excited the aviation industry in the country. The A380 comes at a time when traffic between India and the USA is booming, and airlines are planning to launch both non-stop and one-stop services between the two countries.
The India-US sector is today one of the most lucrative and also the busiest. About 1.5 million passengers travel on this sector every year, and the market is growing by a healthy 10 per cent. Of course, other routes, including India-UK and India-Gulf are also equally buoyant, but the one to the US is among the most profitable.
However, things are likely to shape up dramatically over the next few weeks on this route. While several airlines – including the nation’s flag carrier, Air India – are planning to launch non-stop flights between the two countries, the sector is also being opened up for private Indian airlines.
Jet Airways, the country’s leading domestic carrier, plans to launch one-stop services to New York via Brussels from July. The airline is acquiring Boeing B777 aircraft for its first flights across the Atlantic. The airline also plans flights to San Francisco via Shanghai later in the year.
Another private carrier, Kingfisher Airlines, is impatiently waiting to get government approval for the launch of its international operations. Vijay Mallya, the liquor baron, who launched the airline about two years ago, says if the government does not speed up the clearance, he will start services from America to India, using his US subsidiary Kingfisher International.
When the Indian government threw open international routes to private airlines, it stipulated a clause insisting that a domestic carrier should have flown for five years before applying for international flying rights. Only Jet Airways and Air Sahara – which is being acquired by Jet – qualify for international routes at present.
Mallya, who is also a member of the upper house of the Indian Parliament, is not willing to wait for another three years, by which time Jet Airways would have established its mark in the sector.
The visit of the A380 to India was sponsored by Mallya to mark his airline’s second anniversary. Kingfisher Airlines is also the only Indian airline to have ordered the giant aircraft. It has placed an order for five aircraft, and has an option for five more.
But Airbus officials are hopeful of selling the giant aircraft to many more airlines in the country, including domestic and low-cost carriers. The European aircraft maker hopes to sell over 50 A380s – including a few freighters – over the next 20 years in India. Each A380 costs about $300 million.
According to John Leahy, chief operating officer (customers), Airbus, the company expects 20 orders from India over the next one year for the new aircraft. It has so far received orders for over 150 aircraft from different international airlines, and the first deliveries are likely to be made later this year to Singapore Airlines, followed later by Emirates and Qantas.
Kingfisher will be getting the deliveries only in 2011, in time for the launch of its non-stop flights to the US – Mumbai-New York and Bangalore-San Francisco. Airbus officials last week pooh-poohed speculation that most Indian airports were unable to handle the huge aircraft, which can seat 850 passengers in an all-economy configuration, and over 500 in a three-class configuration. Passengers in the upper classes can relax in lounges and bars in the upper deck of the aircraft.
Officials from the aircraft-maker were confident that even low-cost carriers in India would show interest in it, as the plane can carry up to 850 passengers, and can even operate on short-haul routes. Domestic airlines could be interested in deploying the super-jumbo on busy routes like Mumbai-Delhi, Mumbai-Kolkata, Delhi-Chennai/Bangalore, or Delhi-Bangalore.
Leahy notes that the A380 can land and take-off from 70 airports around the world. Kiran Rao, executive vice-president, points out that all major Indian airports are capable of handling the aircraft. But there’s likely to be a bitter dog-fight over the Indian skies between the two major international plane-makers, Airbus and its American rival, Boeing, which is pushing for its Boeing 777 and 787.
Rao adds that the global aviation industry is growing by about 20 per cent annually – in India, the figures are much higher, around 50 per cent – and there is a growing need for an aircraft the size of an A380. Besides, airlines operating flights between India and the US, other European and Gulf carriers could also press the A380 for services to India, say Airbus executives.
Both the Europe (especially the UK) and Gulf are high-volume routes with thousands of passengers travelling daily between cities like Mumbai/Delhi and London, Frankfurt and Dubai. The A380 is being positioned to serve such sectors as well.
Carriers from America are already operating non-stop flights between the two countries. Continental and American Airlines operate non-stop flights between New Delhi and New York and Chicago respectively, while Delta flies non-stop between Mumbai and New York.
State-owned Air India, which is in the process of merging with Indian (formerly Indian Airlines), the government-owned domestic giant, is also launching non-stop services to the USA (New York and Chicago) from June. The airline currently operates about 24 weekly flights to the US, which will expand dramatically in the coming weeks, as it starts getting delivery of new Boeing aircraft.
Continental, the world’s fifth largest airline, is also launching non-stop flights between Mumbai and New Jersey.The airline announced that it was advancing the launch date by a month to October 2, following positive market response to the proposed flights. “We have been delighted with the response to our original announcement from customers in both India and the US, and we are confident the service will be a great success,” remarks Jim Summerford, the airline’s vice-president for Europe, the Middle East and India.
The India-US aviation sector took off in a big way following the signing of an Open Skies agreement between the two countries in 2005. According to India’s External Affairs Minister Pranab Mukherjee, the open skies treaty is set to have effect in areas much beyond the aviation sector. “It is not just impacting on figures of aircraft procurements, but is also reflected in tourism figures.”
There has also been a sharp upsurge in Indo-US trade ties. The US is today India’s leading foreign investor and its largest trade partner. India is the fastest growing export market for the US and bilateral trade has grown by over five times over the last 16 years – from a mere $5.6 billion in 1990 to $31.92 billion in 2006.
The balance of trade is in India’s favour, with exports to the US growing by 16 per cent last year to $22 billion. American exports to India soared by 26 per cent to $10 billion. Foreign direct investments from the US amounts to over $5.5 billion, accounting for 13 per cent of total FDI since 1991.
Not surprising then that air traffic between the two countries has also been growing sharply in recent months. Airlines from both countries – and the two major aircraft makers – are now positioning themselves to cater to this growing market.
