Air India fears shrinking market share post Jet-Etihad deal

NEW DELHI: As Abu Dhabi carrier Etihad's access to the Indian market multiplies by fourfold as part of its equity deal with Jet Airways, national carrier Air India's worst fears have come true.
The carrier feels that more foreign airlines will use this as a precedent to aggressively lobby for increasing their presence in the Indian market.

According to Air India's chairman and managing director (CMD) Rohit Nandan, Dubai carrier Emirates, which has swept away a lion's share of outbound traffic from India, thanks to a similar increase in access a few years ago, will soon come knocking at the door asking for an increase in the number of flights. "What has happened has happened , but we want to bring it to the government's notice that this should not be repeated. We are apprehensive that Emirates and other foreign carriers may push for more air capacity," Nandan told ET.

In the backdrop of the financial deal between Naresh Goyal-owned Jet Airways and Abu Dhabi's national carrier Etihad, the two regions decided to revise air capacity upwards by 36,670 seats per week from the existing 13,300 seats per week, sparking concerns among the local airlines and private airports.

This revision, which is against a demand of 42,000 seats per week that Abu Dhabi government had asked for, will help Etihad come on an equal footing with Dubai's national carrier Emirates, which has 54,200 seats per week.

Emirates' request for flying 80,000 seats per week into India has been pending with the government for a year now. However, loss of traffic is not the only concern that Nandan has as he also foresees a pricewar with Etihad increasing operations into India to fly passengers abroad.

"It is imminent that they (Etihad) are going to unleash a price war with increased operations to India and we will have to live with it as India is a price sensitive market. However, it has to be seen how sustainable lowering prices for a long time would be even for competition," Nandan said.

With Ajit Singh asking Air India to be on its toes to live up to new competition, Nandan doesn't think it would be very difficult as the national carrier plans to expand operations too and broaden its network adding new non-stop destinations.

"We offer a different product, which is non-stop flights and we take passengers directly to destinations as opposed to flying them via another stoppage. Market will grow and I don't want to give a kneejerk reaction. In fact, I want to be optimistic to tackle new competition," he added.

Air India has been at the forefront of opposing the increase in traffic rights given to Etihad, with Nandan calling its financial deal with Jet a back-handed way of obtaining access to India, ET had reported earlier.