Better deals in offing for those flying abroad

March 6th, 2011 - 4:40 pm ICT by IANS  

KPMG New Delhi, March 6 (IANS) After making the skies more affordable for millions of Indians in the domestic aviation space, India’s low-cost carriers are now promising the same in international travel.

Come August, air travellers from India will have the option to choose from three budget carriers to fly overseas, with privately-run IndiGo set to join SpiceJet and the state-run Air India Express in the international circuit.

SpiceJet has already started the process for expanding its operations in the overseas segment, while IndiGo is gearing up for a grand entry, according to analysts, who say this may prove to be a game-changer in India’s international civil aviation segment.

“Yes, it will have an impact on the market,” said Amber Dubey, director for defence and aerospace with global consultancy KPMG, referring to the current scenario, where Indian carriers transport up to 40 percent of Indian passengers travelling overseas.

“This is an extremely positive development. It will certainly boost competition, improve the operational efficiencies of carriers and, more importantly, offer better deals for the Indian passengers flying abroad,” Dubey told IANS.

With the norms governing Indian carriers to fly abroad requiring minimum five years of operations and 20 aircraft, IndiGo is set to get the necessary regulatory approvals in August. SpiceJet, on the other hand, got the approvals from October.

“It is a great thing for our company to provide services in the international segment. I feel we will be able to give good value to passengers who were paying astronomical fares to international players,” Aditya Ghosh, IndiGo’s president, told IANS.

According to officials at the Directorate General for Civil Aviation (DGCA), the civil aviation watchdog, IndiGo’s international rights will allow operations from many cities in India to Singapore, Bangkok, Dubai and Muscat to begin with.

The budget airline had stunned the Indian aviation space in January when it announced a $15-billion deal with the European aircraft manufacturer Airbus Industrie for buying 180 A-320 aircraft.

SpiceJet, on the other hand, was granted permission to fly abroad from last October, and started its first international flight from New Delhi to Nepalese capital Kathmandu Oct 7, 2010, followed by flights from Chennai to Sri Lankan capital Colombo Oct 9.

Air India Express flies to 13 international cities, mainly in the Gulf and East Asia.

SpiceJet, which was acquired last year by Tamil Nadu-based media and entertainment giant Sun Group, has also signed up with US aircraft manufacturer Boeing for buying 30 B-737 planes in a deal worth $2.7 billion.

Analysts believe the planned fleet expansion by low-cost carriers was in line with their long-term goal of joint focus on the international segment, but said it was early days to predict the number of aircraft that would be deployed for international operations.

“In the medium term, my understanding is Indian carriers will look forward to a market share of 50 percent in the international circuit. So the fleet deployment will largely depend on this factor,” Dubey said.

Another boost for the growing budget segment and its international foray could come from Delhi International Airport Ltd. The company is expected to take a decision in April on an integrated domestic-cum-international terminal complex for low-cost carriers.

“We will definitely take a decision on it next month,” said P.S. Nair, chief executive-corporate, for the airport business of the Bangalore-based GMR Group, which has majority stake in the Delhi airport project. “The plans will be ratified next month.”

The proposal includes linking existing terminals such as 1A and 1C, which are no longer operational, to the new low-cost carriers’ domestic terminal 1D. This will give budget carriers in the national capital a facility on the lines of London’s Stanstead airport.

(Rohit Vaid can be reached at rohit.v@iansin and biz@ians.in)

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