Leaning on Big Brothers for global reach

How India’s low cost airlines are dreaming big by partnering with Global aviation giants such as Emirates and Qatar Airways…

Shrinidhi Hande

It is always better to collaborate than compete. If there is one industry that has understood this concept early and implemented it successfully as well, it is the aviation Industry. While airlines do seem to compete with each other in plain sight, they regularly shake hands to form partnerships that can assure mutual growth. Despite being in one of the largest aviation markets in the world, India’s budget airlines haven’t had any major international partnerships-but this scene is changing now, with Spicejet and Emirates inking a deal as well as Qatar Airways-Indigo partnership both signed late 2019 and effects of which we will get to see this year.

While Emirates and Qatar Airways are global players in aviation, their India coverage has been limited to very few cities (9 for EK, 14 for QR). Clearly there is more room to serve a large country such as India with ever increasing number of international fliers. At the same time, India’s home grown budget airlines have international dreams but their ambition is limited by multiple factors such as funds and fleet limitations.

On November 25, 2019, Emirates signed a codeshare and interline agreement with India’s Spicejet to give travelers to and from India a seamless access to a wider and a stronger route network. When this partnership comes into effect, international flyers flying to and from India can get more flight options on routes operated by both Spicejet and Emirates while also getting to book and fly seamlessly to/from destinations operated only by Spicejet or Emirates. Similarly Qatar Airways has signed a one-way codeshare pact with India’s largest airline, Indigo. Under the pact, Qatar Airways would be able to place its code on IndiGo flights between Doha and Mumbai, Delhi and Hyderabad. Qatar Airways also has expressed interest to invest in Indigo, hinting that they are aiming for much larger involvement and serious partnerships in the days to come.#1

AirlinesCities flying to in IndiaCities flying to (rest of the world)
Qatar14150+, 87 countries
Emirates9150+, 80+ countries

Above table gives a snapshot of current reach, as of December 2019. When a full scale partnership comes into effect, a Spicejet customer can gain access to 150+ international destinations while Emirates customer can fly seamlessly to about 50 Indian cities.

Clearly the advantages are obvious: An Emirates customer flying in from Buenos Aires can fly all the way to Guwahati or Calicut or Pondicherry with final leg served by Spicejet from nearest metro Emirates flies to- such as Kolkata, Mumbai or Hyderabad.

International Reach:Qatar and Emirates fly to over 150 destinations worldwide outside of India. Despite their best dreams, Indigo and Spicejet cannot have that kind of reach and command over global markets. Partnership is a great way to gain instant access to global market. Being able to collaborate with Qatar and Emirates will open up a whole new market and possibilities for India’s LCCs.

By coordinating their promotional offers and discount sales, Qatar + Indigo or Emirates+ Spicejet can offer extensive possibilities to Indian travelers looking to fly abroad. For example, assume Emirates is offering discounted flights to Miami, USA from Mumbai in India. However if I am based in say a small town of Madurai in Tamil Nadu, I will have to plan a separate Madurai-Mumbai return ticket to make use of this Mumbai-Miami deal. Risk hitherto with such two separate tickets is that if my Madurai-Mumbai flight is delayed, I risk missing Mumbai-Dubai-Miami flight as Emirates has no obligation to wait for me or book me on next flight. In the new scenario of single PNR Madurai-Mumbai-Dubai-Miami ticket, I can book Madurai-Mumbai-Dubai-Miami in one PNR at discounted rates with assurance of free rebooking if I am to miss the connecting flight due to late arrival of earlier flight. This peace of mind is the single largest benefit to passengers.

Cargo: A huge potential is waiting to be untapped in the cargo space and interline partnership is a great start in the right direction. While we focus on passengers where margins are wafer thin, cargo space offers higher revenue potential if a reliable and time guaranteed service can be offered to shippers.

Journey of thousand miles begins with one step:We have seen airline to airline relationships start with basic partnerships such as interline/codeshare and over time growing to a more serious Joint Venture partnerships, one airline investing in another airline and so on. In case of Emirates-SpiceJet, Qatar-Indigo there are several ways both airlines can take their relationship to next level, so to speak. Qatar-Indigo partnership seems to be limited to select cities only at present- if it works well this could be extended to other cities Indigo operates to, just like Emirates-SpiceJet deal.

Mutual Growth:As per DGCA report, over 80 per cent of India’s international traffic is lifted by foreign airlines#2. ME3 or the three major carriers from the Middle East- Emirates, Etihad and Qatar together account for lion’s share of outbound travelers from India. All three would have loved to expand their India footprint but there are limitations imposed by bilateral rules as to how many seats they are allowed to operate out of India as well as other challenges- many of India’s tier II, tier III cities cannot support a wide-body plane that needs longer runway and more specific airport infrastructure. Hence it is a smart move to piggy back on India’s leading airlines to pick passengers from these smaller airports and feed them either into their global hubs (Dubai, Doha) or to nearest metro. Giving convenient end to end option will boost their load factors and offer greater choices and convenience to passengers.

Interline partnerships are not exclusive.Emirates already has partnership with Air India. Indigo and Spicejet will have their task cut to ensure big brother and his passengers are not left dissatisfied in any way. All great things that can theoretically be possible need to be materialized on the ground with lots of efforts and coordination.

Premium cabins: Low cost carriers Spicejet and Indigo do not offer business or first class seats. This implies even when a passenger is willing to pay for business or first class seat for entire journey, they won’t be getting it. Indigo and Spicejet will most certainly offer best of their service to business/first class passengers flying with them for the final leg- such as most spacious seats possible, meals and priority boarding but it is still a missed opportunity.

Spicejet did have SpiceBiz on former Jet Airways 737s that had business class seats. However poor demand is understood to have forced Spicejet to reconfigure those aircrafts to have more economy seats, taking away a potential opportunity to differentiate with its rival and provide business class option to their international guests.

Frequency:Many smaller cities have flight connectivity only few times a week or just once per day. This could be a challenge when an international inbound flight gets delayed and passengers miss their connecting flights. If next flight is only after day, passengers will not be keen to wait a whole day to get home, particularly when there are flights with other airlines or an overnight train option. Indigo and Spicejet will need some strategy to deal with this situation.

Smaller planes:I know for a fact international long haul passengers hate being put on a smaller turbo prop aeroplane for their final leg after a long journey in a widebody jet. Their cabin bag won’t fit in overhead space in an ATR or Q400, space around, toilets everything suddenly feels so small compared to previous flight. Managing their expectations and giving them good quality service will be a challenge to low cost carriers.

Strength -Collaborating is always better than competing -Combined reach will be phenomenal (Domestic reach of LCCs + international reach of ME3) -Maximum benefits with minimum capitalWeakness -Limited frequency to tier 2, tier 3 cities -No business/first class products
Opportunities -Potential for stronger, deeper partnerships -Dubai and Doha can be reached on narrow body jets, hence LCCs can deploy more direct flightsThreats -Vistara growing strong with 3 cabin classes -Planned Air India stake sale -Non-exclusive partnerships

The pandemic had a somewhat positive impact on cargo business. With diminishing passenger revenue, cargo operations became the lifeline of airlines. Many passenger jets had their seats stripped off so that more cargo can be transported. Local partners who could offer last-mile connectivity were sought after, authorities actively supported cargo flights that carried essential goods. Spicejet-Emirates as well as the Qatar-Indigo code share partnership for cargo is still intact and is poised to grow in post covid era. We wish all the success to the airlines.



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