Just another Episode in Fierce Competition Involving India, the Middle East and More
From the pitcher’s mound at Dodger Stadium in Los Angeles to the Fox Theatre in Atlanta, the battle for a share of the growing overseas market from India is being waged both on and off the front pages and website home pages at levels that are creative and sometimes entertaining. Take a look at this Emirates promotion at Dodger Stadium last month to promote an expansion of the airline’s Doha-to-Los Angeles A380 service: (https://www.youtube.com/watch?v=chhh4-2plYY).
The battle pits Air India, the nation’s flag carrier, against carriers in the Middle East who have connecting flights between the USA and India that have become very popular. It also pits U.S. carriers against carriers from the Middle East. U.S. carriers, in particular Delta Air Lines, charge that the latter are, effectively, government-supported and have an advantage over U.S. carriers, which would like to see them barred from landing at U.S gateway airports. But U.S. carriers have made no progress in persuading federal regulators, Congress or the Obama Administration to change or amend the USA’s Open Skies policy and restrict entry into the U.S. by the Middle East-based airlines.
Regardless of how one might feel about the Open Skies debate or how much others might root for India’s flag carrier, the situation at present bodes well for U.S. travel suppliers and destinations hoping to tap into what is a lucrative source market that is growing larger and will continue to grow larger as lift capacity no longer seems to be an issue.
A Quick Background: First, the market from India has, in one sense, always been there. For instance, a decade ago, one study put the size of the (travel capable) middle class in India, where more than one-fifth of the nation lives beneath the poverty line—at 50 million people. And now, in 2016, according to India’s National Council of Applied Economic Research (NCAER), India’s middle class population is estimated to be 267 million. In another decade, by 2025-26, the number of middle class households in India is likely to more than double from the 2015-16 levels to 113.8 million households or 547 million individuals.
Second, a cursory look at India’s international outbound travel suggests that they first like to visit nearby regional destinations (Thailand, for instance, is a favorite) with European destinations, particularly France, their long-haul favorites. As for the U.S., as members of a group of more than 40 Indians told us when we accompanied them on part of a tour through the U.S. Mid Atlantic several weeks ago, it is an aspirational destination. That is, were it possible, Indians really want to visit the USA.
Third, more than any other nation, Indians have a strong VFR connection. Scores of thousands of expatriate Indians populate the Boston-to-Philadelphia corridor in the Northeast and California’s Silicon Valley. Also, India has more students going to college, graduate and high schools in the U.S. than any other nation except China. In the 2014-2015 academic year, 132,888 students from India were studying in the United States (up 29.4 percent from the previous year). Students from India comprise 13.6 percent of the total international students in the United States
Finally—there is more following the table below—lift capacity to the USA has increased, both in direct flights and in connecting flights, especially by carriers based in the Middle East. The 7,000-plus mile journey to the United States is no longer a daunting obstacle to those from India who want to visit friends and relatives or buy a tour package.
A 20-Year Timeline:
Arrivals to the USA from India
|Year||Arrivals||% Change over Previous Year|
|*Figures for the years 2015-2020 are forecast figures|
|Source: U.S. Department of Commerce, International Trade Administration, U.S. National Travel and Tourism Office|
The Middle East Connection: The data above correlate strongly with the growth in capacity of the three major airlines based in the Middle East: Qatar Airways, Emirates and Etihad. The latter is only 13 years old, while the others—in business a little longer—began to expand significantly in the early 00s. Combined, the three have more wide-body, large capacity aircraft than any single carrier. And all are well-funded. Because of government-and/or-royal family backing in each country, none of the carriers has any financial worries.
With their financial grounding, the base area of three carriers has emerged as the world’s major global connection location—a designation that used to be reserved for major western European cities. And their base operations make them virtual “neighbors next door.” Qatar Airways operates out of Hamad International Airport; Etihad is headquartered at Abu Dhabi International Airport; and Emirates is based at Dubai International Airport. All three have numerous flights to destinations throughout India.
Distance between Base Airports of Etihad, Emirates and Qatar Airways
|Dubai International Airport||Abu Dhabi International Airport||83 miles|
|Dubai International Airport||Hamad Intl. Airport (Qatar)||241 miles|
|Abu Dhabi International Airport||Hamad Intl. Airport (Qatar)||187 miles|
|Source: Prepared by Inbound Report|
How They’re Connected: Once the passenger on a flight from India (aboard Etihad, Emirates or Qatar Airways reaches one of the three airports above) they are readily connected to the North America/USA.
—From Dubai International Airport, Emirates flies to: Boston, Chicago, Dallas Ft. Worth, Houston, Los Angeles, New York-JFK, San Francisco, Seattle/Tacoma, Washington Dulles and Toronto-Pearson. Also, Air India, which connects at Dubai International Airport, flies to/from Bangalore, Chennai, Delhi, Goa, Hyderabad, Kochi, Kozhikode, Mumbai, Visakhapatnam.
—From Abu Dhabi International Airport, Etihad has flights to Chicago, DFW, Los Angeles, New York (JFK), SFO, Washington-Dulles and Toronto-Pearson. (Air India flies from this airport to and from Mumbai.)
Etihad has a special feature that makes it the most popular connecting point to the USA. It is just one of 15 foreign airports in six different countries—and the only airport in Europe or the Middle East—with a U.S. Customs and Borders pre-inspection facility. Passengers connect here have their baggage check and go through their “arrival” check here. So, when they reach the U.S., their arrival is no different than if it were on a domestic U.S. flight.
—From Hamad International Airport, Qatar Airways serves Boston, Chicago-O’Hare, Dallas/Fort Worth, Houston-Intercontinental, Los Angeles, Montréal-Trudeau, New York-JFK, Philadelphia, Washington-Dulles and, recently added, Atlanta. (From the same airport, Air India Express serves Kochi, Kozhikode, Mangalore and Mumbai.)
The Response from India: According to a report by Saurabh Sinha in the Times of India, Air India is switching into an expansion mode and has decided to add 100 planes to its current fleet of 132 in the next four years. All airlines within the group — parent Air India, Air India Express and Alliance Air — will get more aircraft under the plan.
“By March 31, 2020, Air India group will have 232 planes. While 9 aircraft (six Boeing 787s and three B-777) are from the previous order (of 111 planes), the rest will be new orders for leasing planes. We are going to grow aggressively and fight for leadership across segments,” said Ashwani Lohani, Chairman, Air India, who said that the carrier will be looking at one-stop flights to the U.S., in addition to its non-stops. Currently, Air India has direct service from India to Chicago, Newark’s Liberty International, New York’s JFK and San Francisco.
U.S Airlines—Party Poopers: An indication of just how fierce the competition is for traffic to, from and through the Middle East came last week when Atlanta-based Delta announced that it would not renew its long sponsorship of the city’s historic Fox Theatre because of a performance at the theatre which celebrated new flights out of Atlanta by Qatar Airways. Qatar had hired A-list entertainer Jennifer Lopez to perform at the historic Atlanta before a crowd that included Qatar’s CEO Akbar Al Baker. Delta said because of the performance it will not renew its sponsorship of the Fox Theatre after more than 20 years of support.
Then, when the first flight of the new service—Qatar Airways used an A-380 aircraft—landed in Atlanta, Delta Air Lines declined a request from airport officials to make available one of the limited number of gates at Hartsfield-Jackson International Airport big enough to accommodate the wide-bodied aircraft. According to news accounts, the airline said that it develops its flight schedules and plans for gate usage months in advance, and couldn’t find a viable option to move its aircraft in the time allotted, adding that it would have had to move multiple aircraft to make room for the A380.
As a result Qatar Airways passengers were forced to de-plane by using old mobile staircases and then were transported by buses to the terminal. In subsequent flights, Qatar plans to use Boeing 777s for the route; they fit more easily into traditional gate space.
Going Forward: In the near term, at least, barring some calamity or political disruption, the Middle East-based carriers seem to have almost limitless resources to increase the size of their aircraft fleets and promote their routes through every conceivable channel imaginable—from public relations to sponsorships of soccer teams worldwide, along with countless special events. Air India and U.S. airlines as well, are going to have to develop ways of competing and connecting to open additional lanes to India—because the growth of inbound traffic from India seems certain to continue its steady increase. This battle among major international carriers to provide service between the market and the United States can only benefit the U.S. travel suppliers and destinations hoping to gain share of the market.
(Note: You’ll find wall-to-wall coverage of IPW in the next issue of the Inbound Report, which will appear in two weeks. Watch for it.)