Air India, AirAsia to tweak 'flight path' to avoid internal competition

Under the streamlining plan, A-I may exit five routes and AirAsia India four

Air India and its wholly-owned subsidiary AIX Connect, which flies under the brand name AirAsia India, are likely to streamline their flight operations on nine domestic routes to avoid internal competition, sources said on Friday.

Under this “streamlining” plan, Air India is likely to exit five routes and AirAsia India might stop operating services on four others, sources said.

“The exit of one from a route will lead the other to increase its flights on that. Therefore, the overall frequency on that route is unlikely to change by much,” a source said.

On January 27 last year, Tata Group took control of Air India from the government. Towards the end of the year, Air India took complete ownership of AirAsia India by purchasing the remaining 16.67 per cent stake in the low-cost carrier from Malaysia-based AirAsia Group for Rs 155.64 crore.

Sources told Business Standard under the plan devised to streamline flight operations, Air India was likely to stop flights to and from three cities: Bhubaneswar, Bagdogra, and Surat. Currently, Air India is operating about 74 flights a week on five routes connecting these three cities to India’s metro cities, according to aviation analytics firm Cirium (see table 1).

Once Air India stops operating on five routes — Delhi-Bhubaneswar, Mumbai-Bhubaneswar, Delhi-Bagdogra, Kolkata-Bagdogra, and Delhi-Surat — AirAsia India will boost its services on them, sources said.

AirAsia India has a strong presence at Bhubaneswar airport. The low-cost carrier currently operates 154 flights a week connecting Bhubaneswar with five other cities: Delhi, Mumbai, Bengaluru, Kolkata, and Pune. It also has a big presence at Bagdogra airport. It is operating 70 weekly flights connecting Bagdogra with three cities: Delhi, Kolkata, and Bengaluru.

AirAsia India operates no flights from Surat.

Under the plan to develop synergies, AirAsia India will stop operating flights on four routes: Delhi-Bengaluru, Mumbai-Bengaluru, Delhi-Visakhapatnam, and Mumbai-Lucknow. Currently, the low-cost carrier operates about 126 flights a week on these four routes, according to Cirium (see table 2).

Sources said these four routes had a sizeable number of premium customers and a full-service carrier like Air India -- with its front cabins (business class, etc) -- could earn more revenues on them than AirAsia India. Also, the exit from the four aforementioned routes is part of the ongoing strategy of AirAsia India to get out of certain metro-to-metro routes where it has found intense competition, they added.

For example, AirAsia India stopped operating flights on the Delhi-Mumbai and Delhi-Kolkata routes in July last year. 

According to Cirium, Air India operates 2,187 flights per week (domestic and international). On the other hand, AirAsia India does about 1,377 flights per week (only domestic). When Tata Group took control of Air India, it also took charge of the airline’s low-cost subsidiary Air India Express, which operates flights primarily between India and Gulf countries.

On November 2, when Air India got complete control of AirAsia India, the full-service carrier had said it had begun the process of creating a single low-cost carrier subsidiary by merging AirAsia India and Air India Express.

An internal working group has been formed for the two carriers’ integration, which is expected to take approximately 12 months, Air India had said. AirAsia Group has allowed AirAsia India to use the “AirAsia” brand name for 12 months.

AirAsia India has been making losses since its first commercial flight on June 12, 2014. Its net loss increased by 42 per cent to Rs 2,178 crore in FY22.