Air India, India’s largest international carrier by available seat kilometers (ASK), is expanding its international network with new flights to Phuket, Thailand. The airline will commence operations to Phuket from December 15, 2023, with four weekly flights initially, increasing to daily service from January 8, 2024. Phuket is the first of four new international destinations that Air India plans to launch by the end of March 2024.
Capitalizing on Visa-Free Travel
Thailand has added India to its list of visa-free countries, effective from November 10, 2023, until May 2024. Currently, four Indian carriers, four Thai carriers, and one Bhutanese carrier operate direct flights between India and Thailand. However, IndiGo remains the sole carrier offering flights to Phuket.
With a previously affordable and easily obtainable visa, including an “on-arrival” option, Thailand has always been a popular tourist destination. By introducing visa-free travel, Thailand has ensured renewed attention and solidified its position as a mass tourism destination.
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Delhi as the Air India Hub
Air India holds an advantage over IndiGo in terms of transferring passengers, as all its operations are under one roof. However, for international-to-international transfers, both airlines stand on equal footing.
Seven of Thailand’s top ten source markets are Asian countries, with the remaining three being Germany, the UK, and the USA. None of these three countries have direct connections to Phuket, except for seasonal charters from the UK.
This traffic is currently handled by Middle Eastern carriers. Air India’s timings offer competitive two-way connections from London to Phuket, while connecting flights from other European and American cities have long layovers.
Taking on IndiGo
With its Phuket expansion, Air India has clearly signaled its intention to take on IndiGo head-on, the only airline offering nonstop flights from Delhi to Phuket.
On average, 5,000 passengers fly nonstop between India and Thailand daily. Around 200 passengers fly nonstop to Phuket from Delhi, while the rest connect via Bangkok or use alternative modes of transportation. Air India’s offering allows passengers to combine multiple destinations without changing airlines.
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Air India will seek an edge over IndiGo through its interline arrangement with Bangkok Air.
Significantly, Air India is entering a small, monopoly-controlled market currently dominated by IndiGo, which has a cost advantage over Air India and offers more frequencies and destinations in Phuket and Thailand.
If this expansion strategy continues, Air India could also launch flights to Phuket from Mumbai.
Tail Note
The new flights will add to the existing 265 weekly departures between India and Thailand. The Air India group plans to induct one new aircraft every six days, enabling rapid expansion within India and beyond. Phuket’s launch indicates Air India’s willingness to challenge IndiGo.
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Moreover, Air India is moving beyond its cautious approach and embracing bolder choices.
This suggests that we can expect further regional expansion from Air India in the coming days. The airline’s ability to balance its full-service and low-cost (Air India Express) offerings will provide further insights into its plans to take on IndiGo. For now, Air India has left AIX to handle domestic route competition with IndiGo. Its recent additions of flights to Mangalore from Bengaluru, Hyderabad to Lucknow, or Bengaluru to Trivandrum have broken IndiGo’s monopolies. With Phuket, the same strategy extends to international routes.
Air India’s costs are higher than IndiGo’s. Will it attract a sufficient mix of business and economy class passengers to offset these higher costs? Will transit passengers compensate for the higher costs? These are the risks that Air India faces as it goes head-on with IndiGo. A cost advantage may never materialize, but a near-level playing field is essential over the next few years. Can expansion wait until then? Clearly, it cannot, and Phuket is just one of many new stations and routes on the horizon.
Ameya Joshi is an aviation analyst.
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Updated: 25 Nov 2023, 10:26 AM IST