Presidential Triumphs!

Aviation loves a high-profile visit and the accompanying photo-opportunity. A pint of warm beer seals a new Manchester – Beijing service; a duck pizza brings a new service from Italy to China we all know the score;; hugs and kisses and along comes an A350 or B787 to cement a new trade agreement.

This week Donald is in India. He arrived in Ahmedabad, not quite the epicentre of demand between the United States and India but at least it is the home of Prime Minister Modi.A two-day visit doesn’t avoid the need for a tourist visa but such details usually get waived for important people so that’s OK. And the limit of US$5,000 being brought into the country won’t be relevant when the credit card takes all of the hit.

But what can we reasonably expect from this visit, especially given that the US is gearing up for a Presidential election. Interestingly, the table below shows that the market between the two countries has been pretty flat for the last five years, indeed almost as flat as the reaction to “Soo Chin Tendulkar” during President Trump’s opening address.

It is probably only a coincidence that the annual rate of growth has fallen since the election of a new US President, and it has even contracted in 2019. Indeed, this may have been a factor in the visit: Trump and Modi will both be looking for a different type of “contracting”, one that results in business growth.

The India – US market is extremely large and extremely competitive. It’s dominated by 6th Freedom passenger traffic from carriers such as Emirates, Qatar Airways and Etihad which even offers US pre-clearance as a value-add marketing tool at Abu Dhabi. For such a large market to be dominated by 6th Freedom carriers, and for the two major domicile carriers (Air India and United) to only handle 25% of all bookings, says as much about the missed opportunity for both as the network structure of those 6th Freedom carriers.

In terms of direct services, the India – US market has probably been underserved from a non-stop perspective for quite some time. Air India currently operate six routes, four of which originate from Delhi and the remaining two from Mumbai. United Airlines recently added a SFO – DEL service to their long-term services to Newark from Mumbai and Delhi whilst Delta Air Lines launched a Mumbai – JFK service at the end of 2019.

As the chart below confirms, Delhi has over 1.2 million bookings to and from the United States each year; that’s around 3,300 bookings a day but with only 5 non-stop flights a day providing around 1,400 seats it’s no wonder that the 6th Freedom flows are so large.

All of which means that a presidential visit coincides with lots of opportunity for new air services in the coming years, especially as US airlines have been taking a battering in another major emergent market in recent years. Certainly, the US airlines are better equipped to serve the market than they were previously with brand new A350’s and B787’s at their disposal and Air India are not exactly the toughest competitor on the planet, or indeed the financially strongest.

The American Airlines recently announced Seattle – Bangalore service will be well received by the 26,300 indirect annual passengers travelling on this route. Along with the connecting flows from other West Coast points, a new Alaska Airlines partnership and plenty of commercial links in the IT trade and other sectors, the direct flight between the two cities appears to make sense. However, moving to double daily frequencies from Delhi to New York and Chicago might be better at stemming a large part of the current traffic losses to other carriers.

Presidential visits are frequently the catalyst for new air services. They are also great for winning votes in election years. If you subscribe to the theory that Donald doesn’t do anything without expecting to see some benefit follow, then the current trip may just be a Presidential Triumph. Even if Soo Chin sounds more like a Chinese virus!

2020