Gulf NRIs could heave a sigh of relief as low-cost
airlines take to the skies
Qatarm March 28, 2005:
The Peninsula
MOIZ MANNAN
It all seems to be happening for the long-beleaguered
Gulf NRI wanting to travel home at an affordable price.
We now have Air-India Express, Air Arabia and even
the proposed ‘Kerala Airways’ all promising
to deliver on that seemingly-distant dream of being
able to fly home more often, more cheaply.
But is there really some reason to be so excited?
Or, is all this in fact much ado about nothing?
For as long as anyone cares to remember, Gulf NRIs,
particularly Keralites have been complaining of unduly
high air fares. Things had even come to a pass when
several Gulf Keralite bodies threatened to boycott
the Indian carriers if they did not lower their fares.
For obvious reasons, this move never took off, but
the extent of discontent was pretty apparent.
At this year’s Pravasi Bharatiya Divas, Kerala
Chief Minister Oommen Chandy made it a point to refer
to the long-pending grievance of Gulf Keralites and
assured that his government would take the initiative
in launching a budget airline. In this effort, he
had called upon wealthy NRKs to invest in the project.
A few days back, former Norka minister and Roots
Chairman, M M Hassan, was in discussion with NRKs
in Sharjah. He was reported to have told them that
when NRKs meet this August in Thiruvanathapuram for
Samanvayam-2005, the airline project would be one
of the major areas of discussion. Keralite expats,
he said, could participate in the project by taking
shares of Rs10,000 and above.
Recently, however, the Cochin International Airport
Limited (Cial) has emerged as the front-runner to
execute the project, tentatively named ‘Kerala
Airways.’
At a recent meeting of the Cial board, its ex-officio
chairman Chandy asked Managing Director V J Kurien
to put together a feasibility report on the project.
At the same time, Chandy is reportedly lobbying in
New Delhi to press the centre to allow such an airline
to operate on the Gulf Sector. So far, the Civil Aviation
Ministry has not been open to the idea of permitting
airlines other than Air-India and Indian Airlines
to fly on Gulf routes.
Apart from political lobbying, Chandy is understood
to have directed the board that a detailed feasibility
analysis and presentation on the project be made to
the Centre. If his attempt works, Kerala would be
the first state to float an independent airline.
After Auckland Air in the US, Cial sports the highest
profit to turnover ratio among aviation firms in Asia
and Europe, according to a presentation made to the
board of directors. Against Rs17.11 crore net profit
(turnover Rs 68.94 crore) last year, the airport company
has posted Rs31.45 crore (against Rs82.25 crore turnover)
in 2004-2005.
Be that as it may, there are already others promising
a better deal to Gulf NRIs, particularly Keralites.
To begin with, none of them have hinted at touching
Doha, but the sharp difference in fares makes it worthwhile
for Indian expats in Qatar to fly home via Dubai,
Sharjah, Abu Dhabi or Salalah.
Several Indian carriers recently announced rock-bottom
fares to destinations like Dubai, Abu Dhabi, Singapore
and Kuala Lumpur
Air-India Express announced the launch of its international
operations from April 29 by offering a Delhi-Abu Dhabi
ticket for as low as Rs2,750. This is almost 50 per
cent of the existing fares on the sector. According
to V Thulasidas, Chairman and Managing Director of
Air-India, the wholly-owned subsidiary would operate
flights to all countries in the Gulf except Saudi
Arabia.
Initially, with three next-generation 737-800 Boeing
taken on lease, it will fly to Abu Dhabi, Muscat,
Dubai and Salalah. When the fleet size is expanded
to 18 aircraft as planned, the carrier will operate
to more global destinations, including south-east
Asian countries like Singapore, Bangkok and Kuala
Lumpur. The Boeing 737-800 aircraft would have a single
economy class configuration of 180 seats.
The service will include the Indian cities of Kozhikode,
Kochi, Thiruvananthapuram, Mumbai and New Delhi. Air-India
has already placed orders for 18 Boeing 737-800 aircraft
at a cost of Rs50bn. The delivery of the aircraft
will be made in three years . For the launch operations,
three aircraft have been leased from Boullioun Aviation
Services Inc by Air India Charters Ltd.
Another Indian carrier looking at quick turn around
overseas destinations is Air Sahara. It has announced
the launch of its daily flights to Singapore and Kuala
Lumpur from May with an introductory round-trip fare
of Rs10,000. This is 37.5 per cent lower than the
current average airfare of Rs 16,000 on these two
routes.
International carriers, already flying on these routes,
are expected to reduce fares on these routes to match
the offers. At the moment, all eyes are on Jet Airways,
which is slated to commence operations to Singapore
and Kuala Lumpur soon. Once the Gulf sector opens
up further, it will be just a matter of time when
more private players jump in with low-cost services.
Gulf airlines had earlier indicated that they would
not cut prices once Air India Express started flights
to destinations like Abu Dhabi and Dubai as travelers
were willing to pay for their “premium”
services.
In some ways, they could be right. For one, there
seems to be no scientific study conducted on the exact
nature of the demand from NRIs. No concerete figures
are available as to precisely how many Indian expats
in the Gulf avail of air fare benefits from their
employers.
In fact, a group of NRKs raised several concerns
about the Air-India Express service during a meeting
with top Air India Kerala government functionaries
earlier this month.
The next few months will give us an idea of what
the promised benefits boil down to in reality and,
in that, how well non-resident Indians respond to
the new service. Lessons learned by AIE, one is sure,
will be invaluable for the proposed ‘Kerala Airways.’
