Indian expatriates demand lower fares

Despite three million expatriate Indians in the Gulf, low cost carriers are still unable to fly between the two areas

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By  John Irish Published  May 30, 2004

|~||~||~|Expatriate Indians in the Gulf have one serious gripe. Getting home each year, be it to Kerala or Mumbai, is always ridiculously expensive for a trip that is often less than three hours. Until the end of last year, it seems there was little they could do. The duopoly of national carriers Indian Airlines (IA) and Air India (AI), in effect the same company, controls the lucrative routes to the Gulf that cater to over 3 million expatriate Indians. Keralite Indians, for example, contribute 25% of Air India’s annual revenues. “The majority of people working in the Gulf region belong to the middle or lower income group and these people pay from their pockets to purchase tickets once or twice a year to travel home,” says Sunil Thomas, a Keralite expatriate in the UAE. “Air India charges in peak season around Dhs2200 to fly from Abu Dhabi to Trivanduriam and more to Cochin, but if I want to go to London, it only costs a fraction more.” Thomas argues that in the current state of affairs there is no alternative beyond the two national carriers, as their price hikes during the peak season force alternative airlines to adopt similar fares. However, the entire argument was thrown into question last year when low cost carrier Air Arabia hinted it was hoping to operate services to India at 50% of the average cost. As the Sharjah-based airline began proving its low cost, no frills model could work throughout the Middle East, expatriate Indians responded in kind with calls to boycott the national carriers in the hope of pushing the Indian government to enforce lower fares. In turn, Kerala’s state government said it would back Air Arabia’s application to gain permission from the Indian authorities to operate flights to Kerala. However, it also urged Air India and Indian Airlines to create low cost carriers serving the route. Air India’s eventual response was to shelve all proposals for a low cost carrier, with the government refusing to impose obligations on the airline to do so. “Low cost carriers can only be commercially viable if the operating costs are low, such as non-union staff who cover a multiple function, no meals, landing and takeover from secondary airport where the handling costs are relatively low,” said a source in Air India. “These factors are not applicable to AI and hence the fares have to be in alignment with commercial reality.” Comments from Indian Airlines officials were even more damming on the low cost model. “I don’t want to comment on Air Arabia, but I don’t think our passengers are badly treated and particularly want that type of service,” said A K Goyal, an Air India representative. “Like every airline we raise our prices during peak times, but we are still much cheaper than Emirates, for example.” On whether he believed Indian expatriates were getting a raw deal, he agreed that maybe prices were a little steep and that there may be space for an Air Arabia, but that was a government decision. However, not all expats are 100% behind the low cost carrier. Shakir, a Keralite based in Bahrain, questions Air Arabia’s involvement in increasing expatriate unrest. “Who started this campaign? It’s promoted by Air Arabia, because they want to start a new service and exploit new business in what is bound to be their most successful route. At the same time, we still have to fight against Air India.” That government decision is taking an age. Naturally protective of its national carriers, until now, Air Arabia’s attempts to enter the Indian market are proving fruitless. At the end of April, the airline, seemingly irritated at the never-ending approval process, agreed with the Keralite state government on price and destinations in the hope that the central government would cave in. “We might be able to start flights to India before the end of the current year,” Ali Fairooz, Air Arabia’s director of sales and marketing, told Gulf News. “From our side, we have forwarded all the necessary papers. We hope the Indian government will give Air Arabia traffic rights soon. “However, Indians are getting impatient. Indian expatriate associations are increasingly encouraging passengers to avoid travelling on the national carriers. Many feel betrayed by their own government’s failure to offer them a less expensive mode of travel. The discontent even led Non-Resident Keralites Affairs Minister, M.M. Hassan, to suggest stronger steps against Air India could be taken if things didn’t change rapidly. What those steps will be are unclear. However, the message from expatriates is evident. “The international civil aviation scenario has changed and many countries are adopting open skies,” Y.A. Rahim, president of the Sharjah Indian Association, told the Chenai-based Business Line. “The Indian government should encourage competition and allow more economy airlines to operate to India in order to help the lower and middle income Non-Resident Indians, who make significant contributions to its economy through their remittances,” he added. Over the last month, the two national carriers have responded to a certain degree by cutting fares between the Gulf and India by between 5-18% depending on the season. Both carriers are quick to point out that those reductions have been made due to the abolition of a sales tax for aviation turbine fuel rather than pressure groups. Nevertheless, as long as Air Arabia is touting 50% reductions, it seems Indian expatriates will not be satisfied with the current price drops. Nikhil Dhodapkar, general manager, marketing at the New Delhi-based Sahara Airlines agrees, indicating that Air Arabia will gain permission sooner rather than later. “The pressure will be too much for the government,” he says. “I foresee it happening in the next 12 months, but it will happen on a step by step basis. I think they’ll open up one airport at a time, for example Mumbai, as Indian Airlines doesn’t go to Mumbai, so they could allow them to fly to it.”||**||

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