From Chitral to Chittagong, Southasians are flying in greater numbers than ever before. At a time when aviation fuel prices have hit the roof, they are taking advantage of airfares that continue to drop. In India, no-frills budget airlines are drawing passengers away from the Indian Railways. And across borders, private airlines are bringing new dynamism to routes sectors once monopolised by state-run carriers.
The airways of Southasia are unrecognisable from what they were just a few years ago. And the current buzz of flight activity is only the beginning, for there are scores of cities waiting to be linked, and millions of the middle class who would fly if only a well-connected airline would land at their local airstrips. Indeed, there is still much to be done even in the linking of the region’s capitals: The best way to get from Kathmandu to Colombo is via Bangkok or New Delhi, and no one can get to Islamabad/ Rawalpindi without a stopover in Lahore, Karachi or Doha. But as liberalisation of the cross-border and domestic sectors is spurred on by a crucially important Indian Ministry of Civil Aviation bent on opening up the skies, it seems that the Subcontinent is set to become smaller and smaller still.
Budget travel boom
It is in India, the aviation sector’s biggest domestic market, that the impact of liberalization is most apparent. First, there is the number of airlines. A decade ago, passengers arriving at the domestic terminal of Delhi’s Indira Gandhi International Airport would see nothing but Indian Airlines’ red-tailed Airbuses and their hand-me-down first-generation Boeing 737s in the non-descript livery of Alliance Air. Today, the tarmac is a garden of colours with Jet Airways’ yellow sun, Air Sahara’s green and saffron stripes, and Air Deccan’s open palms.
Then, there is the number of passengers. The volume of travelers to pass through Indian airports quadrupled between 1981 and 2003 from 11 million to 44 million. The growth during the second half of this period can be attributed entirely to private airlines. Smaller carriers such as Jagsons have been in operation for decades and there have been companies such as East West Airlines and Modiluft that had higher ambitions but failed to take off. The real change came in the late 1990s, when Jet Airways and Air Sahara, with smart management and late-model Boeing 737s, were able to pose a challenge to the Indian Airlines monopoly. It is not so much that the two carved themselves out a share of the market, but they managed to expand the market itself. Jet and Sahara were joined in 2003 by Air Deccan, and the three carriers now share between them 61 percent of India’s domestic air traffic.
With Deccan came the dawn of budget air travel in India. The airline, whose chief executive G R Gopinath calls it “the Udipi hotel in the airline industry” in a reference to its economy and efficiency, has been competing with the Indian Railways for custom, targeting passengers who travel both air conditioned I and II class. It is clear that budget airlines are drawing customers who would never have flown before: Air Deccan claims that about 40 percent of its passengers are first-timers. With market studies showing that the middle class boom is going to lead to demand for more seats and more destinations in years to come, business houses are lining up to register new airlines. Indian companies were among the biggest spenders at the recent Paris Air Show, where they put down, orders between them for a total of USD 13 billion on 150 new aircraft, all of which are intended for low-cost carriers. One of the buyers was beer baron Vijay Mallya’s Kingfisher Airlines, launched in May with the aim of being a budget airliner with frills.
Mark Winders, CEO of Royal Airways, the company that owns the new carrier SpiceJet, claims that his airline’s target is not the passengers of Jet or Sahara, but what he calls the “real market,” i.e. high-end train travelers, who constitute a massive volume of potential low-end air travelers. Deccan for its part has ordered 30 Airbus-320s worth USD 1.8 billion and is getting another 30 ATR 72-500s to connect numerous smaller airports. Gopinath does not worry about a slump because the growth of air traffic, he says, “is on an irreversible path.”
The changed economics of air travel within India has already led to the opening of air corridors to smaller cities and towns. Many of these are now connected by direct air routes, thereby saving the passenger a mandatory trip to the nearest metropolis. A trip from Belgaum to Hubli within Maharashtra, for instance, now takes half an hour, and in Madhya Pradesh one can reach from Jabalpur to Bhopal in 50 minutes. With trunk routes approaching saturation and locked up by Jet, Sahara and Indian Airlines, newer carriers such as the Banglore-based budget airline AirOne are joining Deccan in connecting the smaller cities. Across India, distances are shrinking as we speak.
Aviation infrastructure will be hard pressed to keep pace with this continuing boom in air travel. Recent moves to lease certain key Indian airports to private companies should mean that infrastructure will be less of a check on the industry’s growth. As things stand, however, India’s radar surveillance and anti-collision systems are antiquated. This, when Indian skies already include some of the most crowded airspace in the world. The Calcutta-Delhi corridor in particular is busy all night long with heavy overhead traffic between East Asia and Europe – this was already the case in the mid-1990s (see Himal, April 1996) and airways are now more congested than ever before. Some dramatic midair collisions in the recent past prove how bad things can get, and India will have to act fast to keep its skies safe in the face of the liberalisation-led boom.
To get a glimpse of the ferment in the airways of Southasia beyond India, one can fly to Nepal for a look. More people are flying for less in Nepal as they are in India. North of the border, though, the increase in number of airlines, seat over-supply and resultant fare wars are not the only reasons for this change. In this insurgency-torn country, as frequent bandhs and highway firefights make travel by bus unreliable and insecure, Nepalis who can afford it are choosing to travel between the capital and major towns by air. In the past, tourism was what sustained Nepal’s incredible number of private airlines. Today, domestic travelers sustain the airlines, filing into the cabins of Buddha Air’s first-hand Beechcraft 1900Ds or onto the ageing Twin Otters, Domiers and Saabs of the other airlines.
The most dramatic change in Nepal’s aviation sector, however, came with Cosmic Air’s purchase last year of its first 110-seater Fokker 100 jet. Cosmic now has a fleet of four of the aircraft and is siphoning off passengers from airlines with smaller aircraft on three domestic routes: Kathmandu to Biratnagar, Bhairahawa and Nepalganj. The airline has also taken the plunge and started traveling to cross-border destinations. The inefficiency and stagnation of the national flag carrier, Royal Nepal Airlines, which has but two Boeing 757 jets, has meant that Cosmic is well-placed to take advantage of bilateral air service agreements between Nepal and its neighbours.
Cosmic is already flying from Kathmandu to Delhi and back two times a day and is increasing its Kathmandu-Dhaka service – started in November 2004 – from three to five flights a week. By providing the cheapest fares, this no-frills airline has created a niche for itself in a short period. The Kathmandu-Delhi airfare, which had remained artificially high for decades during the Royal Nepal-Indian Airlines monopoly, have fallen dramatically. Start-up Cosmic claims to have captured 45 percent of the traffic between the two capitals.
In July, the Cosmic hopes to begin flying Benaras-Kathmandu, a route left unserviced after Indian Airlines pulled out two months ago following decades of maintaining the link. Cosmic has applied for permission to fly to Calcutta and Lucknow, and is also hoping to make it to Rangoon by way of Calcutta utilising what are known as ‘fifth freedom rights’ to pick up passengers from Calcutta for the onward journey. Nepal also has unutilised fifth freedom rights that allow its carriers to fly to Karachi by way of Delhi. Now that private airlines are now crossing borders, one can expect that routes with potential will not be left unexplored for much longer.
Air traffic as a CBM
Aside from the lowered airfares and the near-exponential growth in passenger volume, the fact of over-the-border flights has been the most significant change in the aviation sector of the region. While the ultra-sensitive India-Pakistan air corridors (between Delhi, Karachi, Lahore and Bombay) are still reserved for the flag carriers of the two countries, travel between India and the other Southasian countries has been thrown open to private carriers only over the past year. With their dynamism and spurred by profit motive, the private airlines are expected to have the Southasian skies roaring with traffic as they seek out viable routes.
The geopolitical benefits of an active Southasia-wide air network are not hard to appreciate. The more air routes connect the regional capitals and metropolises, the more contact between the people of the often antagonistic countries. The catalytic function of air travel will lead to increased trade and development of common interests that can only help defuse regional tensions. The development of air corridors between Southasian capitals is in this sense a great confidence-building measure.
While the state-run national flag carriers continue to make cross-border flights between regional metropolises, Sahara and Jet join them today in flying very successful runs between Madras and Colombo and between Delhi and Dhaka. The two airlines have suspended flights on the Delhi-Kathmandu sector due to Sahara’s loss of pilots to new Indian carriers and Jet’s disagreements with the Civil Aviation Authority of India, and the stiff competition that Cosmic Air provided on that route to both. However, spokesmen for both Jet and Sahara have said that the carriers will resume flights over the course of the 2005 monsoon.
Even as they seek to dig their heels deeper into the Southasian market, Jet and Sahara and looking outwards. They are already flying to Kuala Lumpur, Singapore and London and India’s open skies policy will soon allow them to fly to anywhere in the world, with the exception of West Asia. This is the only sector that the Ministry of Civil Aviation in New Delhi is keeping off limits for some years still, as a protective measure in favour of Indian Airlines and Air India, for whom the West Asian routes provide substantial profits (see interview with Indian Civil Aviation Secretary Ajay Prasad).
And more cross-border Flights
Southasian civil aviation’s most unhappy episode has to have been the closing of Indian airspace to all Pakistan International Airlines (PIA) flights in the aftermath of the December 2001 attack on the Indian parliament. Not only were all flights between India and Pakistan suspended, but PIA flights to other Southasian destinations were affected as well, as virtually every regional route requires flight over Indian airspace. Reciprocal flight bans by Pakistan also hit Air India and Indian Airlines very badly, as the carriers were made to take half hour-long detours over the Arabian Sea on all flights out west. Flights between Pakistan and India resumed in December 2003, with the Indian authorities chastened by the effects of their intemperate action.
Within Pakistan, PIA has been spearheading massive price wars in the hopes of re-establishing its command over the domestic market, at one point setting fares in the Karachi-Lahore sector at one half those offered by the private airline Shaheen Air. State-owned PIA faces competition on both domestic and international fronts by all-jet private airlines. Air Shaheen and Aero Asia, another Pakistani private sector carrier, are making use of bilateral air service agreements with other countries in order to fly to internationally. Though the two have West Asian destinations covered from Muscat to Kuwait City, they do not as yet fly to anywhere east of the Sindh-Punjab border.
Given the current thaw in relations between India and Pakistan, private airlines can be expected to be flying the open skies between the two countries in the near future. When this happens, perhaps we can hope to see Punjab better connected within itself than ever before, with flights operating from Lahore to Jalandar or from Patiala to Multan. Beyond this, the increased economic contact that more air routes would provide would further the possibilities of a lasting peace between the Subcontinent’s most cantankerous neighbours.
In Sri Lanka, the most successful of Southasia’s national flag carriers, Air Lanka, was partially privatized in 1998. It now goes by the name of SriLankan Airlines; the majority of its shares are held by the Sri Lankan government and a key portion is owned by Dubai’s Emirates Airlines. The Sri Lankan government announced in May that it would allow two private sector carriers to fly alongside SriLankan Airlines on international routes. The contenders for these slots include current domestic operators Aero Lanka (formerly Serendib Air), Lion Air and Expo Aviation as well as India’s Deccan Air. A spokesman for Expo Aviation has said recently that the airline would like to begin its international operations by targeting Maldives and the South Indian market, including Madras, Trivandrum and Trichy.
Druk Air, the national flag carrier of Bhutan, remains the only airline in Southasia to make use of fifth freedom rights. It uses these to increase its passenger volume when its flies its Paro-Calcutta-Bangkok route and its Paro-Kathmandu-Delhi route, the first leg of which is perhaps the best mountain flight of the eastern Himalaya, flying within 50 km of four of the world’s five highest mountains. Druk has recently acquired two new Airbus A319s as part of a fleet renewal programme.
Jet and Sahara, the large private airliners of India, have started big in their roles as international carriers, with massive investment, advertising budgets and late-model aircraft types. Operators such as Nepal’s Cosmic and Dhaka-based GMG Airlines are small carriers that have taken on flying beyond domestic routes as a challenge and are hoping to grow in the process.
GMG is Bangladesh’s only private carrier. Named for the initials of its founder’s father, GMG’s golden deer insignia – a reference to a Bengali saying and a song by Rabindranath Tagore – is already plying cross-border routes that connect Dhaka and Chittagong with Calcutta. In flying the latter route, GMG has provided a service that flag carrier Biman Bangladesh Airlines has failed to provide in its three decades in the air. GMG has announced that it is seeking to increase its flights to Calcutta and to expand its operations to New Delhi, Bombay and Madras. Meanwhile, it will soon begin flights on the Dhaka-Colombo sector, where it will replace Biman as the designated carrier of Bangladesh. GMG is also expected to join Biman and Cosmic in linking Dhaka and Kathmandu.
What the private airlines such as GMG have been able to do is to create markets where none seemed to exist. Cosmic, for example, has managed to attract Bangladeshi tourists who would otherwise not have thought to travel to Kathmandu, just 50 minutes away, on holiday. When GMG starts flying between Dhaka and Colombo, it will surely surprise with the new passenger market that it is able to tap. Likewise, it is thought that there would be enough seats to sustain routes such as Lucknow-Kathmandu and Dhaka-Guwahati. The best proof of Southasia’s readiness for new routes is in the many cities in India currently being connected to Colombo: Bangalore, Delhi, Trivandrum, Madras and Cochin.
Possibilities abound. Infrastructure in smaller airports is a problem at the moment, but both passengers and the industry would benefit, for instance, if carriers were allowed to fly from Delhi to Biratnagar or Bhairahawa in the Nepal plains, which would also serve passengers in eastern Uttar Pradesh and northern Bihar respectively. People seeking to get to eastern Nepal from Delhi already make use of the domestic airport in Bagdogra, near Siliguri. At some time in the future, when other Southasian countries share open borders of the sort that Nepal and India enjoy, small towns in other regions as well may benefit from the accessibility of airports on either side of their borders.
The ultimate success of Southasian aviation will be in the linking of smaller metros across the region’s national boundaries – when flights ply routes from Multan and Hyderabad (Sindh) to Jaipur, Amritsar, Ahmedabad or Indore. It can be expected that as the aviation industry continues to expand, there will be a proliferation of such smaller routes. In India and Nepal, the saturation of trunk routes by the larger domestic carriers is already pushing the smaller airlines on to sectors that connect smaller towns. In a similar fashion, as regional trunk routes become saturated with multiple airlines from either side competing for custom, we should see an increase in the variety of cross-border contact between the people of Southasia’s countries. Beyond making the subcontinent’s regions smaller within themselves, the move away from capital-centric travel will mean more interaction between regions whose relationships have been overshadowed by state-centric thinking.
More point-to-point routes between smaller destinations will also be required in order to decrease congestion along main air corridors. And if the Ministries of Defense and Civil Aviation in India were to open up new air corridors along which passenger aircraft would be permitted to fly, planes flying to Delhi would not have to stack for long over Uttar Pradesh before they are allowed to land.
Problems, and mere possibilities
For cross-border traffic to enter new routes sectors, air service agreements between the region’s governments would have to be revised. The seat quotas allowed by the current bilateral agreements – for instance, 6000 per week to carriers from either side in the case of Nepal and India, and 4800 per week in the case of India and Pakistan – do not provide airlines with enough seats per week even to service trunk routes between major cities. Cosmic Air, for instance, uses 14 of its permitted 20 flights per week to India in flying to Delhi alone. The current air service agreements also only allow flights to specific destinations in host countries and hence do not allow for the flexibility in routing that private airlines today seek.
National flag carriers have long flown between the region’s cities, but they have other priorites – illustrated, for instance, in Biman Bangladesh’s prestige flights to European capitals – and even Southasia’s capitals are very poorly linked today. The most egregious failure is the failure to link Delhi to Rawalpindi/ Islamabad, and the lack of flights between Dhaka and Colombo, and Kathmandu and Colombo are also significant. Domestic private airlines are beginning to correct these failings, but what is required is also a conscious attempt by the governments to work to develop these capital linkages.
Clearly, air travel in Southasia is on a high roll. Trends unimaginable just a few years ago are today accepted as commonplace. The high volume of passengers who are flying, the low airfares in spite of high fuel prices, the opening up of new air routes, and the cross-border linkages by private airlines, are all harbingers of even more changes in the future. One such development could be the development of a trans-nationally owned Southasian airline whose sole purpose would be the linking of the Southasian cities across borders – and the idea may not sound that incredible a few more years down the line.
But the most important development would be the increase of cross-border connections. Once airport infrastructure is improved and once pressure from the private sector brings the region’s governments to further open their skies, there will be little to keep the aviation sector from developing a vast and dense network of routes across Southasian frontiers. There may be concrete walls and barbed-wire fencing on the ground, but air travellers flying across regional countries by the tens of thousands, and then hundreds of thousands, would slowly undo the psychological divide between the region’s countries. Once this happens, Southasia will have gone from being a bunch of countries to being a region in truth.