Low-cost Chinese carriers are going head-to-head with Indian airlines and attracting Indian passengers who make up the latter’s outbound travel market—flying them to destinations in the North America, the Far East, Australia and New Zealand by offering low fares on crowded routes.
“In the past few years we have seen a gradual increase in Chinese carriers operating in India,” Indiver Rastogi, president, global business travel at Thomas Cook (India) Limited, told the Times of India, adding, “These airlines offer a combination of value-for-money fares and high quality experience that has attracted the price-conscious Indian traveler. These airlines are also popular with corporate travelers who have business interests in China or want to use the country as a hub to fly onward to the USA.” The competition opens up a whole dynamic for India, which has grown in numbers to be the Number 9 overseas source market for the U.S. inbound tourism industry.
It is all about the price point. As Rastogi explained it: “The fare difference varies between 20,000 rupees ($293) and 25,000 rupees ($366) for long-haul destinations like the U.S. and Canada compared to other carriers like Singapore Airlines (SIA), Thai Airways and Malaysian Airlines. The competition price differential for China and Japan is from 15,000 rupees ($220)—20,000 rupees ($293).”
The Times account points out that the limited access to the Indian market granted to mainland Chinese carriers has saved airlines like SIA, Cathay Pacific, Thai, Malaysian and even Air India from a Chinese takeover on routes to the east. At the moment, all major Chinese carriers fly mainly to and from Delhi.
Among mainland Chinese carriers that operate to India, China Southern has the maximum number of flights with a twice-daily on the Delhi-Guangzhou (its hub) route, with both flights on the wide body Airbus A-330 aircraft. Chengming Yan, China Southern head in Delhi, said: “Almost 60 to 70 percent of our flyers from India take connections via Guangzhou to the U.S., Australia and New Zealand. We have a great network from our hub to those places. Indian flyers do not need to wait for more than two hours for their connections.”
Asked about the competition, John Nair, head of Cox & Kings‘ business travel, told the Times that cheap Chinese carriers pose a major challenge to airlines globally “Their fares are quite low compared to Indian or other foreign carriers via Singapore, Thailand, Hong Kong or Malaysia. They compete at 20-30 percent lower fares than other carriers operating in these sectors,” he says.
It seems as if Indian and other non-Chinese carriers—aware of the competition—are stressing instead the quality of their service and their experience in dealing with the market. In the meantime, the Chinese carriers have apparently tapped into an Indian market—one in which travel in large and often multigenerational groups—in which a ticket price that is $220 cheaper can translate into thousands in savings.
