India's airlines - A simmering rivalry

With Indian Airlines operating overseas and Air India eyeing domestic feed, the pair could soon be competing head-on

Chris Jasper/NEW DELHI

Unlike his opposite number at Air India, Indian Airlines chairman and managing director Sunil Arora is relatively new to the airline game, having been seconded to the domestic carrier in the run-up to disinvestment from India's Ministry of Civil Aviation, where he is joint secretary. Arora, like Mascarenhas, is due to step down this year, and makes little secret of the fact that he is looking forward to returning to government.

Hardly surprisingly, Arora is less inclined to decry New Delhi's record in supporting India's two major airlines, or the difficulty of pushing through aircraft orders - although he is equally vocal in talking up the long-term prospects of the airline he now controls.

"This is the second phase of Indian airline liberalisation, with disinvestment one of the key strategies to help realise some of the goals which the government has set for itself in the march towards economic liberalisation," he says. "It has been a very conscious, deliberate and well-thought-out decision which we are all committed to implementing."

The likely bidders for Indian Airlines are all major industrial groups - foreign airlines having been barred from the bidding because of its status as a domestic carrier. To promote competition, rival Indian carriers have also been barred.

Arora says the Indian market "is not the worst", and that "there is every likelihood that there will be takers for Indian Airlines". He adds that the lack of airline experience of the likely bidders (which, as in the case of Air India, is likely to include the controversial Hinduja Group) is not a concern, and "what a big company needs is resources and the right people. We do not need aviation experts at the level of the owner".

Arora is far more outspoken in addressing market issues - and the future relationship with Air India, which looks set to become one of earnest competition as Indian Airlines continues its push into international markets and the flag carrier presses for domestic rights.

Healthy competition

"Indian Airlines and Air India are sister airlines, but there is also a healthy competition or undercurrent of rivalry as far as international routes are concerned," he says. "We would like to augment our connectivity within India and short-haul abroad. Our goals are India and overseas, within five or six hours flight time. And we have a feeling that the way the cake is growing there is enough for everybody."

The origins of this inter-sibling rivalry can be traced to a government move to prop up Indian Airlines by allowing it to develop international routes following the 10-month grounding of its A320 fleet after one crashed in Bangalore in January 1990. Arora is nevertheless unapologetic, claiming it is Air India that has infiltrated short-haul international routes earmarked for Indian Airlines. "They have already moved their international connectivity towards the Gulf, where we have established ourselves, and it would be wrong to say we would not oppose their entry into the domestic market," he says. "If it's an offshoot of international connectivity it's welcome, but as for our respective airline charters, it was never envisaged that Air India was meant for domestic connectivity."

Air India's Mascarenhas is adamant that his airline should be allowed to penetrate the domestic market. "The primary reason is feed," he says. "Indian Airlines might not react very favourably to us establishing a feeder network, but then while we are just international, they are already expanding international routes."

Much depends on India's new civil aviation policy, due to be published this year. Mascarenhas believes Air India "will probably get certain domestic routes exclusively. There is a political obstacle, but in the long term we could do it".

Opening up the domestic market would pose further questions. Should privately owned domestic carriers be allowed to launch international operations, for example? Jet Airways executive director Saroj Datta says that if the possibility of international service presents itself "we will go for it, and be very aggressive when it happens", although he predicts that New Delhi will "protect" Air India and Indian Airlines as long as it retains large holdings in the carriers.

Indian Airlines' fleet expansion plans are in any case already well advanced. The largest Indian carrier in terms of overall market share, the airline has a 55-aircraft fleet of mainly Airbus A300s and A320s and Boeing 737s. Its plans call for expanding to 75 aircraft, beginning with leasing more 737s and A320s.

"The disinvestment does not mean that we run the company on a day-to-day holding basis and lose sight of the objectives," says Arora. "We will try to leave it in as clean a condition as possible, and we want to leave as vibrant an airline as possible for those who come in." He adds: "Even if you look at it very critically, the overall performance - given that we have a relatively old fleet and are duty bound to fly some uneconomic routes - is not so bad."

Source: Flight International