Increasing competition, rising costs and a growing market have prompted India’s airlines to pursue a strategy of operating routes in which only one player in the fray runs direct flights — they account for nearly half of around 392 routes in India, latest data show.
Data sourced from UK-based air travel intelligence firm OAG show that 188 air routes have direct flights operated by only one airline on that route, including Hyderabad-Raipur, Kolkata-Lucknow, Amritsar-Goa, Mumbai-Kanpur, Pune-Indore and Ahmedabad-Chandigarh.
Of these, 35 are operated under the UDAN scheme on which, as per the agreement with the government, carriers enjoy flying exclusivity of three years.
Of the 188 routes, data show, 108 are operated by the two largest budget carriers — IndiGo (61) and SpiceJet (47). The remaining 80 are operated by GoAir, Jet Airways, Air India, Air India Express, Alliance Air, Air Deccan, TruJet and Zoom Air.
The data, which is based on January 2019 figures filed by the airlines with OAG, also show that 123 of these routes do not involve any of the four metro airports — Delhi, Mumbai, Bengaluru and Hyderabad.
Ameya Joshi, a former aviation industry professional, told The Indian Express: “The logic behind operating on monopoly routes is that if you are already flying on a route with high competition and are unable to command the pricing there, you would rather move to a route where you have no competition so you can charge higher fares.”
He said there were three primary factors behind airlines launching routes where there is no competition. “If there’s a one-stop route between two airports that has been operated for years, some airline would start a direct route between the two destinations if there is sizeable traffic going between the two points. For example, the Delhi-Guwahati-Imphal route had been operational for years, and there was sizeable demand for the Delhi-Imphal sector that prompted AirAsia India to start that route. Then, IndiGo followed,” said Joshi, the founder of aviation analysis blog NetworkThoughts.
A check on Google flights for some of these monopoly sectors showed that direct flights on these routes were marginally costlier than one-stop flights. For example, a Kolkata-Indore flight on February 18 with a 3 hour 40 minute halt in Hyderabad cost Rs 3,078; a direct 2 hour 20 minute flight between the two cities costed Rs 3,272.
However, not all monopoly routes pay off as expected. One airline pulled out of an hour-long Mumbai-Surat sector last year shortly after it launched due to competition from other airlines as well as the presence of road and rail connectivity between the two business centres.
“The decision to select routes on which airlines will operate is a function of multiple parameters — where is the hub, how they would rotate the aircraft, etc. At the end of the day, it is a commercial and operational reason behind operating on any route,” said Dhiraj Mathur, partner, PwC India.
As airlines look at connecting newer routes, for certain sectors a level of investment into the infrastructure and market growth is required — established centres, however, do not require this.
For example, for the Pune-Coimbatore route operated by Jet Airways, the nature of monopoly allows the airlines to command the fares. Here, the advantage is in terms of time difference when compared with other modes of transport. The flight is only 1 hour 35 minutes long, while a train journey is over 24 hours long.
Experts also say that a monopoly route’s financial viability can be judged from whether an airline adds more capacity to it. “Regarding the number of seats on these single carrier operated services there are actually quite a few with a sizeable amount of capacity; in one particular case; HYD-RPR (Hyderabad-Raipur) with IndiGo in excess of 50,000 one-way seats which I think in many cases would be a level where some degree of competition existed,” said John Grant, senior analyst, OAG.
The government’s route dispersal guidelines have also played a role. As per the norms, airlines were mandated to fly to certain unconnected sectors.
The rationale behind these routes having exclusivity, analysts say, could be as simple as lack of enough demand to generate capacity supply from other carriers. “A percentage of airline’s flights under the route dispersal guidelines had to be to unconnected areas. To fulfill this obligation, airlines take up routes even if they are not viable. If they become viable, then everybody would be flying on it,” Mathur said.