Flight Plan

What IndiGo, SpiceJet's entry into IATA means for Indian travellers

Ashwini Phadnis | Updated on November 12, 2019

A view of the Chhatrapati Shivaji International Airport in Mumbai.   -  BusinessLine

As IndiGo and SpiceJet expand their global footprint, fliers get more destinations to fly to at lower cost

Late last month, Delhi-based low-cost airline IndiGo joined the International Air Transport Association (IATA), a global club of over 275 airlines. In doing so it followed in the footsteps of the another Indian low-cost airline, SpiceJet, which joined the global club earlier this year.

On the face of it, this should be no big deal as IATA already has 275 airlines internationally as its members. However, what is significant is that both SpiceJet and IndiGo are low-cost airlines which, traditionally, did not join the club because of the costs involved in becoming a member.  

However, with  the aviation market changing over the last few years, it has become more integrated and the walls between full service and low-cost airlines (LCCs) are coming down and these two LCCs want to enjoy the benefits that joining an organisation like IATA brings.

Win-win for airlines and their fliers

Joining IATA should enable IndiGo and SpiceJet to increase their global footprint and also help them bring in more passengers and facilitate their passengers to travel further.

Pointing out that India has the lowest air travel penetration among the top 20 air travel markets globally, Nripendra Singh, Industry Principal, Aerospace, Defence & Security Practice, Frost & Sullivan, says that this shows  the untapped potential that IndiGo and SpiceJet are planning to explore through codeshare partnerships and interlines.

"This is where being an IATA member will assist them to expand globally. It provides both airlines with wider access to passengers from different geographies through IATA-backed agents and member airlines,” he adds.

Kinjal Shah, Vice-President, Corporate Sector Ratings, ICRA, says that joining IATA  will enable these two airlines to enter into partnerships, thereby getting access to routes which otherwise are not being catered to by these specific airlines. "It will help improve connectivity on both domestic and international routes and also improve efficiencies,” she points out.

Talking from the perspective of flyers,  Sharat Dhall, Chief Operating Officer (B2C), Yatra.com, says,  This will  help Indian travellers with more routes added at LCC prices that will probably be more attractive. We can expect the addition of European and South Eastern destinations, which are preferred tourist locations for travellers from India.”  

The two airlines will also enjoy more advantages by joining IATA because, as Singh points out,  joining IATA means that they will have access to  financial services like clearing house (ICH) and Billing and Settlement Plans.

"ICH financial services provide fast, secure and cost-effective billing settlement in multiple currencies. They enable the airlines and airline associated companies' suppliers to settle their passenger, cargo and miscellaneous billings by applying the principles of set off/netting, thus reducing costs and risks. ICH also offers a dispute mechanism of billings and protection in case of bankruptcy and cessation of operations,” adds Singh.

It is not immediately clear which new routes will open up as a result of the two Indian LCCs joining IATA. But SpiceJet has hinted at what passengers can expect when the Indian carrier tied up with Emirates.

SpiceJet's Memorandum of Understanding with Emirates said that it would open new routes and destinations for passengers travelling between India and popular destinations across America, Europe, Africa and the Middle East. This would also provide SpiceJet passengers travelling from India  more choices of travelling  seamlessly with minimum connection times to destinations in Emirates' Europe network, such as London, Paris, Frankfurt, Manchester and Amsterdam.

Similarly, IndiGo has launched its second codeshare with Qatar Airways following the codeshare that it has with  Turkish Airlines, which helps fly its passengers to destinations to and from many cities in Europe, including Amsterdam, Athens, Brussels, Paris and Tel Aviv.

Published on November 12, 2019

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