Domestic airlines turn Gulfwards to fill coffers

Written by Shaheen Mansuri | Mumbai, Aug 12 | Updated: Aug 13 2008, 07:15am hrs
With Jet Airways starting operations to Dubai from August 23, the competition on the lucrative Gulf sector will heat up, said analysts. Kingfisher Airlines too is eyeing an entry into the sector once the airline starts its international operations. However, national carrier Air India already enjoys a 35% market share on the route which has an annual traffic of 1.8 million passengers with a growth of 18% on a year-on-year basis. Analysts feel that since airlines are not performing well domestically, the Gulf route is the most sought after amongst the international routes.

Explains an aviation analyst from a Mumbai-based brokerage firm, In a scenario when airlines are not able to contain their costs due to escalating fuel prices, looking at the Gulf sector makes business sense for airlines that have the permission to fly overseas. For instance, he explains, the Mumbai-Dubai flight on the Gulf sector is 2.5 hours and similarly other Gulf sectors too are of the same distance with an average fare of Rs 20,000 for a round trip.

Even the Mumbai-Delhi route is for two hours with a fare of around Rs 10,000 for a round trip. So, the Gulf sector is the most sought after amongst international routes which has short distance compared to the US or the UK, said the analyst adding that more and more airlines that have got permission to fly international prefer the sector since it can help them curtail their losses to an extent.

Meanwhile, Air India, which until recently had the monopoly to fly to the Gulf network, sees healthy competition intensifying soon. Jitendra Bharghav, director (PR) Air India said, Newer players will definitely vie for some market share on the Gulf sector. At the same, we have decent passenger load factors on Air India and the low-cost subsidiary Air India Express. We have recently deployed four B777s on the Mumbai-Dubai route. He added that their product is good and don't see any dip in the load factors on the sector.

Meanwhile, a travel agent from a renowned travel agency informs that June-August being the peak season for the Gulf sector, airlines have already started offering attractive benefits to travel agencies to garner huge business on the sector. There is already stiff competition on the sector for a larger market share. There are Gulf-based carriers as well as Indian carriers for the newer entrants to face competition from, said the agent, adding that travel agencies are already being lured by expensive gifts to increase the sales volume on the sector.