Air India, the Tata Group and Singapore Airlines-owned carrier, has been in the news recently for all the wrong reasons, starting with the deadly crash in Ahmedabad on 12 June. The airline initially announced the reduction of 15 per cent of its International widebody schedule and has now decided to trim its domestic schedule by 5 per cent until mid-July.
The domestic flights of Air India are operated largely by its narrowbody fleet comprising Airbus A320 family, both “ceo” and “neo”, with over 60 of those coming in from the merger with Vistara. While the airline gave reasons for international cancellations, pinning it to additional checks ordered by the regulator and extended flying hours due to the crisis in West Asia, the domestic flights are immune to airspace closures and the regulator has not ordered any additional checks on the narrowbody fleet.
Air India Cancellations: Key Routes Affected
The airline is pulling out of three routes, viz. Bengaluru – Singapore, Pune – Singapore and Mumbai – Bagdogra, while it reduces frequency on 19 routes, a total frequency reduction of 120 per week. These routes include flights operated by former Vistara aircraft (AI 2xxx series) as well as legacy Air India aircraft (non-refurbished). Data shared by Cirium, an aviation analytics company, shows that the airline operated between 530 to 545 flights a day within India and on 160 sectors, and the impact is on 12 per cent of its total domestic routes.
The reasons for cancellations, though unlisted, point to a combination of factors. The airline has been focusing on additional checks and maintenance on its entire fleet and has seen its fair share of groundings and cancellations over the last week, leading to a cascading effect on its schedule and connecting traffic.
The demand scenario has also been softer over the past few days. Last year, June averaged 4.4 lakh domestic passengers daily. The immediate aftermath of the crash has seen a slight slump in the numbers, though it looks like an industry-wide phenomenon, and numbers are not indicating a very adverse situation for Air India, with the load factors holding on to the reported numbers of June last year. The reduction in capacity from the market could help stabilise fares and stop discounting, if that was thought to be the plan for attracting passengers back to air travel.
Gain for Competition?
On all the routes where Air India is cancelling or reducing capacity, except for the Pune to Singapore route, competition exists. In most cases, the market leader is IndiGo, which is well placed to take away some traffic. However, the end of June marks the culmination of school holidays in all parts of the country and the start of the lean monsoon season, putting pressure on yields and traffic. The reduction in capacity may not increase fares exponentially, but, in fact, help maintain them from the airline’s perspective.
After holding on to the 3100+ daily domestic flights in India, the industry could see a drop of over 100 flights in July, with some days potentially dropping below the 3000 mark. This will also lead to market share alterations, with IndiGo likely to gain some more market share and Akasa Air the next beneficiary. With Air India focusing on reducing route overlaps with low-cost subsidiary Air India Express, the presence of Air India Express on these routes where Air India is reducing capacity is minimal.
Tail Note
Self-adjusting capacity when it cannot adhere to the schedule is a good move by the airline. However, the airline has stated that they remain “committed to restoring our full schedule as soon as practicable, while at all times prioritising the safety of our passengers, crew and aircraft”. This possibly indicates that the airline may review the cancellations in due course and, if needed, extend (or curtail), which could put doubt in the mind of passengers before booking.
The airline is in the middle of a five-year transformation plan called Vihaan.AI. As per its own admission, it has already completed two stages: Taxi, which fixed the basics and Take-Off, which focused on Building for Excellence. The airline is in its third stage now, Climb, aimed at scaling and growing. The airline and its management may have to revisit the plan to see if there are more things that need to be fixed in the basics, especially if it has to face as many cancellations on short notice.
