There is no doubt that the lucrativeness of routes between India and the United Kingdom is ever-increasing. While full-service airlines have established themselves firmly in the highway in the sky between the two countries, low-cost carriers have attempted and failed to operate profitable flights from India to the UK. Will SpiceJet, which announced plans to fly between India and London from December 2020, be the one?
The Indian low-cost carrier started mulling flights between the Asian country and London in July 2020. SpiceJet gained approval from the Indian Directorate General of Civil Aviation (DGCA) to become the designated carrier between India and the United Kingdom, in addition to the United States. But the groundwork to begin flights to the English capital began much sooner. In June 2020, Airport Coordination Limited (ACL), an airport coordinator, indicated that SpiceJet applied for slot pairs at London Heathrow (LHR) and Gatwick (LGW) airports. Its request for slots at LHR was denied, however, ACL’s report showed that the airline had gained approval to operate flights to LGW with the allocation of 18 slots.
New routes to Chhatrapati Shivaji Maharaj International Airport (BOM) and Indira Gandhi International Airport (DEL) were to be established, showed the coordinator’s data. An announcement by the airline on the Mumbai stock exchange (BSE) indicated that it planned to start operations to the United Kingdom on September 1, 2020, as it secured slots at LHR.
Excited beginnings
“I am extremely pleased to share that SpiceJet will launch flights to London Heathrow Airport beginning December this year. SpiceJet will be the first Indian low-cost airline to operate non-stop long-haul flights to the UK,” the company’s chairman and managing director Ajay Singh told Times of India. “London is one of the busiest long-haul destinations from India,” added Singh.
The LCC already stretched its legs on long-haul flights in early-August 2020. At that time, Hi Fly, an Aircraft, Crew, Maintenance, and Insurance (ACMI) provider operated a repatriation flight from Amsterdam, the Netherlands, to India on behalf of SpiceJet. Hi Fly’s Airbus A330neo (registered CS-TKY) landed in Bengaluru and Hyderabad, operating the domestic connection with SpiceJet’s usual call sign that begins with the prefix SG.
It continued to operate chartered repatriation flights throughout August and September. In total, SpiceJet managed to repatriate over a million people from various countries across the globe, also utilizing Hi Fly aircraft, including the Airbus A330ceo and A340.
The aforementioned A330neo will return to fly under SpiceJet’s colors in December 2020, according to the announcement. The A330neo will be equipped with 18 business class and 353 economy class seats, flying a thrice-weekly flight between Heathrow Airport (LHR) and Indira Gandhi International Airport (DEL), and a twice-weekly flight between LHR and Chhatrapati Shivaji Maharaj International Airport (BOM).
Fortunate timing?
For some, the timing to launch a new service, especially an international one, might look precarious. But the Indian low-cost carrier has some weight behind its argument. International travel is largely non-existent. The International Air Transport Association (IATA) pointed out that the demand in August 2020 was 88.3% lower than during the same month in 2019. Many countries, including India, have banned International travel as governments are still wary of the threat that the virus brings.
At the same time, India has established 16 air bubbles, including with the United Kingdom. The bubble agreement allows Indian and UK citizens to travel between the two countries. In the United Kingdom, there is a huge ex-pat community. Furthermore, in 2019, India accounted for £7.8 billion ($10.1 billion) of the UK’s service imports or 3.5% of the UK’s total services imports. Thus, both leisure and business travel could become a cash cow while most other international markets are closed for local Indian and foreign airlines alike.
The argument is further strengthened by the fact that it would wet-lease its aircraft. This means that SpiceJet does not have to worry about acquiring second-hand units or order aircraft off the shelf, which is a very capital-draining process, but also training and preparing its pilots, flight attendants, and ground personnel. Depending on the contract between SpiceJet and Hi Fly, a fair share of other factors could come into play. For example, using a Power By the Hour (PBH) agreement, SpiceJet would only pay for the time that the aircraft is flying – if there is no demand between LHR and BOM, it could park the aircraft for no additional cost except parking fees. Another crucial detail could be the length or conditions of the agreement, which could help the Indian LCC exit its contract if the demand is not simply there to justify the international flights. Flexibility in times of uncertainty can be the key that unlocks the door to a safer future.
Intense competition
However, headwinds are always present. The British government’s ever-shifting travel corridor list does not include India as of October 6, 2020. If a passenger lands in London onboard a SpiceJet flight, (s)he will have to self-isolate for 14 days. The mandatory self-quarantine might become a burden – after all, 83% of travelers surveyed by IATA stated that they would not travel if they had to self-isolate upon arrival.
Then there is the competition. Air India, British Airways, and Virgin Atlantic all fly from Heathrow (LHR) to both DEL and BOM. These airlines have long established themselves as carriers with excellent customer service, particularly the Britain-based airlines. Most recently, another Indian airline launched its own LHR-DEL services, namely Vistara. On August 28, 2020, the company’s first Boeing 787 Departed Delhi and successfully landed in London, kick-starting Vistara’s European services.
For SpiceJet, establishing itself as a major player can become a difficult task to achieve. The same flexibility provided by a wet-lease can become a wolf in a sheep’s clothing. After all, the aircraft flying the journey will bear Hi Fly, rather than SpiceJet livery. The Portuguese company’s crew will provide service, thus it will be difficult for the Indian airline to ensure the best service that is possible. Even then, low-cost carriers are not exactly best known for their exceptional passenger experience, as price becomes the most important factor when picking between a full-service carrier and an LCC.
The aviation industry has seen plenty of examples where low-cost long-haul has not panned out. From AirAsia X, which operated flights to India and Europe for a short while, to Norwegian Air Shuttle, which has been balancing on the edge of a cliff even before the current pandemic. While the latter has reiterated that it still believed in the low-cost long-haul model, there are quite a few doubters in the industry – doubters that SpiceJet will have to prove wrong. The Indian company posted consecutive losses for the past two financial years, including the fact that the company’s negative net worth stood at INR21 billion ($286 million), as showcased in its Q1 FY2021 report.
“We hope our passengers, both business and leisure, make the most of this opportunity of creating fond memories forever with us,” Ajay Singh concluded his statement.
