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Air India and Air Asia India begin optimising their networks

Air India and Air Asia India have started optimising their networks in order to better suit the market needs.

Network optimisation

In November 2022, the Tata Group bought the remaining 16.33% stake in Air Asia India from the Malaysia-based Air Asia group. With this, Air Asia India has now become a full subsidiary of Air India. The Tata Group plans to merge Air Asia India with Air India Express, Air India’s other subsidiary, by March 2023.

While Air India Express mainly focuses on Gulf connectivity from India, Air Asia India is purely a domestic airline. In order to better optimise the network of both Air India and Air Asia India (now known as AIX Connect), the former has begun deciding whether a city will be served by Air India (a full service airline) or Air Asia India (a low-cost carrier).

In the current phase, it has been announced that three cities – Bhubaneswar, Bagdogra and Surat – will be exclusively served by Air Asia India. This means that Air India will exit these stations and hand them over to Air Asia India. Furthermore, two routes – Delhi-Visakhapatnam and Mumbai-Lucknow – will be exclusively served by Air India. In all cases, the flight frequency remains the same. However, capacity on the route may change as Air Asia India uses 180-seater Airbus A320s on all its flights while Air India may or may not have been using A320s or A321s with Business and Economy Classes on flights to the above mentioned cities.

Additionally, Air India will enhance connections from Delhi and/or Mumbai to Cochin, Trivandrum, Visakhapatnam and Nagpur to enable easy, two-way domestic- international-connectivity with long-haul international flights operating from the two metros. Air India will also be increasing frequencies between Delhi and Chennai, Hyderabad and Bengaluru, and between Mumbai to Chennai, Kolkata and Bengaluru. These changes in schedule are set to commence from 13th February 2023.

The acquisition of Air Asia India, together with the ongoing restructuring and expansion of Air India, accords an unprecedented opportunity to optimise the Group’s flight network. Specifically, it allows us to better match routes with the most appropriate airline business model, focusing the full-service airline on metro-metro markets and high connectivity routes, and the low-cost airline on more leisure oriented or price sensitive markets. This will improve our attractiveness to corporate travellers and leisure travellers alike, as well as improve connectivity between key domestic cities and Air India’s fast- expanding international network.

said Campbell Wilson, CEO and MD, Air India.

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Strategic planning

Air India has started planning its long term network. The optimisation of network with Air Asia India can go in three ways:

  • Low-yielding stations where the demand for Business cabin is less can be handed over to Air Asia India
  • High-yielding metros and tier-II cities where the demand for Business cabin is more can be kept by Air India
  • There can also be a case where some cities may be served by both Air India and Air Asia India both. In this case, routes which have premium demand but where the low-cost carriers like IndiGo and Akasa Air dominate may be included. Where this is the case, it is important to understand the market needs while keeping the returns high in a low-yielding market

While this may be done with immense planning, one thing which remains to be answered is whether Air India will hand over its all-Economy aircraft to Air Asia India or whether it will still keep them to maintain the “Air India brand” on some of its routes.

There can also be one more instance. In a market dominated by low-cost carriers (LCCs), entering with a LCC is a no-brainer but to differentiate the product, going with a FCC can also mean that Air India can have a Unique Selling Proposition on that route, something which Vistara has been doing from the start.

Markets which have strong international connections can be served by Air India to better serve the connecting passengers, which can sometimes be better especially for Business Class passengers, as connecting them to/from a LCC can be not good for a airline.

What about Vistara?

While Air India has brought Air Asia India under its entity, Vistara is also slated to be merged with Air India. Both of them are full service carriers so the integration of them may be easier than with Air Asia India.

Vistara offers a premium offering on most routes and operates in certain markets where Air India and Air Asia India both operate. The real challenge that the Tata Group will face is integrating the schedule of all the three carriers (in fact four carriers with Air India Express included) to provide a schedule that is optimum.

The answer to some of these questions may also lie in the seasonality patterns. The 3rd quarter of Indian financial year (September-December) generally sees high visiting friends and family traffic in addition to the business traffic. So Air India can offer its premium products on high connecting traffic cities.

Many questions are there which will eventually surely be answered over time. Moreover, it will be interesting to see how Air India goes ahead with its “business and network plan” going forward.

Meanwhile, Air India recently announced plans to launch flights to London Gatwick.

Featured image by Airbus and Wikimedia Commons

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