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The Rediff Business Special/Nikhil Faleiro

Airlines to fly 'the small route' for big biz

Vijay Nair is symbolic of thousands of Indians of interior regions working abroad. The NRIs constitute a big chunk of airlines' patrons.

Gradually, more and more non-metro cities and big towns like Vijay Nair's Hubli are finding mention on India's aviation map as big airlines launch services to new destinations having new airports.

Travellers everywhere: domestic aircraft movement at Indian airports

This is changing the nature of airline business. The focus is shifting from big aircraft to smaller birds. The idea is to offer passengers greater connectivity on domestic and international routes.

Air-India started the 'trend' by introducing flights to small airports such as Calicut and Panaji. India's international airline is now considering Rs 40 billion acquisition plan for six small capacity long range aircraft and six small capacity short range aircraft. Relegated to the shelf is Air-India's six-year-old proposal for 300-seater medium capacity long range aircraft which would have cost the airline Rs 132 billion.

Growth in small cities

City	1997-98	1998-99	% change
Bhubaneshwar	87,755	107,653	22.7 %
Rajkot	60,182	83,499	38.4 %
Calicut	183,362	193,175	5. 4 %
Pune	230,645	268,359	14.2 %
Leh	58,298	72,159	23.6 %
Madurai	53,578	71,694	33.8 %
Bagdora	86,170	89,270	3.9 %
Visakhapatnam	78,552	90,340	16 %

The smaller birds with 100 to 150 seats will be able to service destinations like Amritsar, Guwahati, Ahmedabad., Pune or Leh. The airlines are forging tie-ups with global players so that direct tickets can be issued at the point of origin of travel. Jitendra Bhargava, commercial director, Air-India, says, ``The objective is to get a fleet which will operate on very short profitable routes so that the large planes can service only one or two very profitable routes overseas.''

Greater connectivity and quicker frequency are the twin mantras that are driving the airline industry today. There was a time when the non-metro sector was considered unimportant because of its lack of growth potential. Today, it has become the most viable route for private airlines. According to a study conducted by the Airports Authority of India, domestic air traffic at the Delhi, Madras and Calcutta airports is expected to grow at 5.4 per cent in 2001-02 while that at Bombay airport is expected to grow at 3 per cent.

Expected growth rates in four metros

Airport	2001-2002	2006-2007	2011-2012
Bombay	3.8 %	3.5 %	3 %
Delhi	5.4 %	4.5 %	4 %
Madras	5.4 %	4.5 %	4 %
Calcutta	5.4 %	4.5 %	4 %

The study found that the proximity of other airports, including the demand for small non-metro airports, has led to a diversion of traffic. For instance, the study found that travellers bound for Calicut and Cochin, who often came to Bombay to catch flights, no longer do so as there were other airports nearby. And with new airports coming up at Calicut, Cochin, Hyderabad, traffic (which was originally meant for the metro airports) would be diverted to these new airports.

Airlines are discovering that it is financially viable to operate small-bodied aircraft on these routes. For example, a Delhi-Amritsar flight on a Boeing requires 2150 kg of aviation turbine fuel while an ATR-42 requires 640 kg. In other words, the small bird saves Rs 29,000 per hour on fuel alone.

No wonder, Sahara Airlines, Jet Airways and Indian Airlines are refocusing their expansion plans towards these areas. Parvez Damania, managing director, Sahara Airlines, says, ``Our focus is on mass-transport market and that is why we are upgrading our fleet to include the short-haul aircraft.''

To achieve this, Sahara is inducting 12- and 30-seater Embraer aircraft from Brazil. With this induction, Sahara will also launch a new division Sahara Connect and this air service will operate on short routes like Bombay-Nagpur, Calcutta-Darjeeling, Madras-Coimbatore and Delhi-Amritsar. With a schedule of 85 daily flights to 35 new destinations, Sahara is hopeful that this new service will increase its market share from the current 9 per cent to 16 per cent in the new year.

Not to be outdone, Jet Airways is also planning to induct another five ATR-42 aircraft which will be deployed on routes linking the Indian metros and mini-metros with the hinterland. Some of the routes that will see the ATRs are Delhi-Udaipur, Aurangabad-Udaipur-Delhi, Bangalore-Hubli-Bangalore and Delhi-Indore-Delhi.

Jet officials are hopeful that the new ATRs will increase the size of the passenger travel pie. With passenger growth stagnant during the past three years, Jet has realised that there is no scope of increasing frequencies on the trunk routes. These new ATR aircraft will be deployed on the feeder routes. A Jet official says, ``The new ATRs will help increase the passenger load factor which is currently stagnant at the moment and increase our reach throughout the country.''

And this irony, that big private airlines are entering sectors which were once the domain of the national carrier has not been lost on Indian Airlines. With air traffic more or less constant, Indian Airlines has jettisoned plans to lease three Airbus A-320s and five Boeings 737s this year. Instead, the airline has decided to change its fleet of aircraft from a mix of wide- and narrow-bodied aircraft to only narrow aircraft.

With IA changing its fleet composition, sources say it will be in a better position to compete against Sahara and Jet. IA, however, may need to change its route profile. Keeping these aspects in mind, IA has put up a proposal of Rs 4.50 billion to purchase six ATR42 500 aircraft. Admits Anil Baijal, chairman and managing director, Indian Airlines, ``The ATRs are best suited for our future expansion plans to cover all destinations.''

Dinesh Keskar, vice-president and country head, Boeing, says, ``Small aircraft are the answer to solve the growing air demand.''

"For the Indian aviation industry, 'fly small, make it big' is the new mantra," says an analyst.

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