Ukraine war keeps Air India on top of non-stop routes to US

The Tata Group took control of Air India in the last days of January 2022. Within days, Russia attacked Ukraine, and the war in Europe has been continuing for over two years now. Of the many repercussions of this war was the American carriers not using the airspace over Russia as western countries banned use of airspace by Russian carriers. This was also the middle of the pandemic and flights were not fully operational across the world.

Over the subsequent quarters, multiple Tata group companies talked about the challenges of the Ukraine war on their financials. From Tata Steel to Tata Motors, the impact of commodity prices, sourcing, semiconductor costs and navigating the maze of sanctions was a challenge for each, except that one entity clearly benefited and made the most like no other – the airline.

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According to data shared by Cirium, an aviation analytics company, exclusively for this article, there has been an increase of just four frequencies between India and the United States in May 2024, as compared to February 2020, the last month of operations before the COVID-induced lockdown. However, a granular look at the data shows that the American carriers have reduced frequency by 21 weekly flights while Air India has added new flights. This remains one of the few routes where Air India’s strength will remain unmatched for years.

Air India operated 33 non-stop flights per week to the US pre-COVID. It launched some new routes as part of the air bubble arrangement, but these were restricted times. On the other side of COVID, Air India now operates 51 weekly non-stops to the United States.

Advantage Air India

Air India operates to New York, Newark, Washington, Chicago and San Francisco in the United States. It operates 34 weekly non-stops from Delhi, 14 from Mumbai and three from Bengaluru. In the United States, it operates 18 weekly departures from San Francisco, 14 from JFK, New York; seven each from Newark and Chicago and five from Washington.

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The non-stop competition from the US side is American Airlines flying to Delhi from New York and United operating to Delhi from Newark. The airline offers a staggering 15,476 weekly seats each way between India and the United States, which is 80 per cent of all non-stop seats on offer.

The route passenger mix includes business travellers, government traffic and a large segment classified as VFR (Visiting Friends and Relatives). The VFR traffic is often senior citizens visiting their children and a non-stop takes away the hassle of transfers at intermediate airports, giving a leg-up to Air India.

Who pulled out?

United was the only carrier mounting a challenge to Air India on the non-stops while Delta and American Airlines had joined in just before COVID as the traffic between the two countries grew rapidly. United has pulled out of Newark to Mumbai and San Francisco to Delhi routes, both now becoming Air India monopolies with San Francisco being a stronghold for the airline. Interestingly, of all its routes to the US, Air India launched the ones to San Francisco the last, but today it has maximum capacity out of San Francisco.

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Tail Note

It remains unclear when the war in Europe will end and on whose terms. Will the world reconcile quickly to the new realities and work towards restoration of pre-war airspace usage? If and when that happens, United will definitely restore its pre-war network, with even Delta and American Airlines entering the market. However, Air India has an unassailable lead in the market right now. It had a 50 per cent share in departures pre-COVID, which is now 80 per cent in what is a much larger spread than before.

The next step for Air India is definitely premiumisation of the product, which it is doing with the deployment of former Delta aircraft on these routes. These aircraft feature the Premium Economy class, which is selling at 1.8 times the economy class fares for future dates and even double the economy class fares closer to departure.

By the time things stabilise on the geopolitical front and American carriers are in a position to add flights, Air India has to hope and get its product right. A not-so-up-to-date product can help in times of constraints like now, but in a free market – the product becomes the king along with pricing, loyalty and other factors.

Air India’s legacy B777s are up for refurbishment. Will it proceed as planned and help Air India deploy the refurbished planes to the United States? Will the A350s help launch new routes to the United States and give the airline the spread within the US? Either way, the war gave the airline the room to fend off competition, and it made the most of it.