Infrastructure, bilateral hurdles for Tata airlines' foreign flight plans

Unavailability of slots and limited flying rights can make it difficult for the airlines to expand in key Gulf and Asian markets

The two Tata group-owned airlines Vistara and Air Asia India’s international expansion plans might face a hurdle in the limited bilateral flying rights and a capacity shortage at Indian airports.

The two main Indian airports of Delhi and Mumbai are choked for addition of new flights, while constrained flying rights could narrow the scope of the two airlines to expand in important Gulf and Asian markets.

Slot constraints at metro airports have hindered the growth plans of the two airlines, primarily in Mumbai, which has a single runway and is equipped to handle the movement of only up to 45 aircraft per hour. 

AirAsia India has been unable to start operations from Mumbai, while Vistara has been forced to add late night flights from the city as slots were not available during peak hours.

“Entry into a market is driven by a couple of factors, it should make economic sense for us and we do it with a long-term plan. Right now Mumbai is slot constrained. Very honestly, there is no place to land or take off. We will get to Mumbai as and when the infrastructure allows,” AirAsia India CEO Amar Abrol said.

It’s important to have a meaningful presence at Mumbai for any airline with international aspirations because passengers travelling abroad look for connecting flights. “A strong presence at Mumbai helps to get good passenger feed for international routes,” says a travel agent.

Metro airports in India follow the IATA guidelines to offer slots which favours an incumbent airline over newer airlines. Under this, an airline can keep a given slot from the previous season as long as it used the slot 80 per cent of the time. Senior executives of Vistara and AirAsia India said that with incumbent airlines like IndiGo, Jet Airways cornering most of the existing capacity, prime slots are not available to the two airlines.

"A formula can be reached so that everyone gets a fair share. New airlines need slots to grow or else there will be a duopoly or monopoly, which is not good for consumers. Customers will also have an opportunity to experience new services, and fares are kept in check," Sanjiv Kapoor, chief strategy officer at Vistara had said earlier.

While slot constraint is one of the problems, what can curtail the two airlines’ international plans are the limited bilateral rights available to the destinations that the airlines are eyeing. Two countries sign a bilateral air service agreement through which they decide the flights or seats per week that can fly into each other's country. The government then distributes the allocated seats to the respective airlines. Flying rights to many of the proposed destinations of Vistara like Singapore, Dubai, are almost consumed and new agreements have not been signed yet. 

For instance, of the total 29,400 seats permitted between India and Singapore, Indian carriers have already utilised 22,000 seats. The quota for Dubai is fully exhausted and negotiations to increase it has not been successful.

The situation could become more complex with older airlines looking to launch flights in these routes.

Industry observers say that low-cost carriers like IndiGo and SpiceJet will look to mount flights to Singapore from Delhi and Mumbai market with long range narrow bodies like Airbus A320 neo and Boeing 737 Max and block flying rights. Air India will also add frequency in the Delhi-Singapore route from March.

A senior government official said that India will be open to negotiating for more flying rights when the airlines will be eligible to fly abroad pointing out that the agreement with Thailand has been recently restructured to add 6,150 additional seats. “I don’t think there will be any constraint of flying rights. It is not a finite resource and can always be renegotiated when our airlines require it,” he said.