The former state-owned airline, Air India, has kept itself busy since the Tata Sons’ takeover. Not a day passes without the airline announcing one scheme or another geared towards its growth. The airline’s growth plan, Vihaan.AI rolled out a couple of weeks ago has set some challenging targets for Air India to achieve, and the primary one is about taking the market share to 30 per cent in five years.

A questionnaire was mailed to Air India, which sought clarification on whether the roadmap includes the rest of Tata Sons’ portfolio or just the state-owned, but it went unanswered. However, as a part of Vihaan.AI, Air India has put into place a detailed roadmap with clear milestones focussing on dramatically growing its network and fleet, developing a revamped customer proposition, and improving reliability. Over the next five years, Air India will strive to increase its market share to at least 30 per cent in the domestic market while increasing market share on international routes, a statement from Air India said.

Conservative target

If one were to assume the roadmap is for the portfolio of Tata Sons’ airlines, including Air India, Vistara and Air Asia India, the total market share of these carriers is around 23.4 per cent as of August. Even though the 30 per cent target is not ambitious, some of the market share will come from IndiGo which is not easy “It will be tricky. Air India will have to fight hard for more market share. If they can get more than 30 per cent, they can pat themselves on the back. Otherwise, questions will be asked,” a veteran airline analyst pointed out.

It is not just about the market share but whether the new roadmap will drive synergies among the airlines to benefit the passengers. “In the final analysis, a passenger chooses airlines based on network, pricing and service levels,” Satyendra Pandey, Managing Partner, Aairavat Technology & Transport Ventures, said. Pandey believes that Air India will have to work hard to command a certain amount of heft in the industry. “For Air India, the 30 per cent will presumably supplement a higher market share in the international segment, estimated to be from 35 per cent to 40 per cent. That said, the traffic on Air India continues to be skewed towards the Middle East, with over 55 per cent of capacity directed to those markets (this includes AirIndia Express). As more direct flights are launched, and traffic flows pick up, this skew needs correction,” he said.

Lessons from IndiGo

In its statement, Air India said it would add capacity as one of the steps toward increasing the market share. But another aviation analyst who earlier worked with Air India, Pankaj Narayan Pandit, said that additional capacity does not translate into higher market share. “An airline cannot sustain operations with empty seats. So airlines in India need to learn from IndiGo on how to gain market share, maintain thatand post profits too,” he said.

He pointed out that the combined market share of all low-cost carriers (LCCs) in India is around 80 per cent, unprecedented in the airline sector across markets. Hence, Air India and Vistara cannot afford to compete with the LCCs in terms of offering low fares as they will continue to lose money. “The portfolio consists of heterogeneous brands with different offerings. There are several dimensions to operating an airline and making it profitable,” Pandit, who also worked with Sabre, a global distribution provider for air booking, said.

Air India’s roadmap sets milestones for achieving each of the parameters like network, fleet expansion etc. and will need a hawk-eyed approach to achieve those targets.