The announcement will not only benefit Indians wanting to visit Canada, but also open up a huge opportunity to airlines from the two countries. India is Canada’s fourth largest international air transport market (Photo: Jason Hafso via Unsplash)
On November 14, Canada announced the conclusion of an expanded air transport agreement with India that allows designated airlines to operate an unlimited number of flights between the two countries. The previous agreement limited airlines from each country to 35 flights a week.
The agreement gives Canadian airlines access to Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. Indian airlines will receive access to Toronto, Edmonton, Montreal and Vancouver and two additional points (cities) India selects.
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The new flying rights under the expanded agreement are available for use by airlines immediately, the Canadian government said in a statement.
The announcement will not only benefit Indians wanting to visit Canada, but also open up a huge opportunity to airlines from the two countries. India is Canada’s fourth largest international air transport market.
Canada, with an estimated Indian diaspora of more than 1.5 million, is a large and growing market, Satyendra Pandey, Managing Partner, Aairavat Technology and Transport Ventures, pointed out.
Improved connectivity, competition
“The total India-Canada air-travel market size is estimated to be in the range of $260-$300 million and growing. Currently the market is served by several airlines but only Air India and Air Canada have non-stop flights,” Pandey said.
“The expanded agreement can both help improve direct connectivity and increase competition,” said Siddharth Narkhede, Chief Airline Analyst, Ishka Advisory, a global aviation data, intelligence and advisory service.
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Gustav Baldauf, founder and CEO, GB Aviation Consulting, said the agreement will be of tremendous help, especially to Indian “newcomers” IndiGo and Vistara on the international market westwards.
To be sure, expanded flights will not lead to immediate profits for the airlines. “… (it) does not mean automatically, that they will be successful and earn money in these markets for some time,” Baldauf, who has served as the Chief Operating Officer of Air India, said.
Operational costs, airport subsidies
Nripendra Singh, Global Director, Aerospace and Defence, Frost and Sullivan, added that value in business terms would be tough to predict as this is dependent on an airline’s operational costs along with airport subsidies and the compensation that airports offer in exchange for connectivity.
Analysts also point to some pitfalls in the agreement. According to Pandey the agreement allows Canadian airlines to access additional points of call – most notably Bengaluru and Hyderabad.
“The basket of cities that India has opened up provides a far higher number of passengers than the corresponding markets in Canada. So it is up to each country’s airlines to see what portion of the market size they can capture,” he said.
It is also not a given that additional flights will translate into success as India-Canada is a seasonal market and even within city pairs, have varied patterns.
“For instance, travel patterns on the Delhi-Toronto route are very different from those on the Delhi-Vancouver route. Additionally, ultra-long haul flights carry disproportionate cost impacts in terms of crew immobilisation and aircraft redeployment. Thus, these factors have to be taken into account. Aircraft type is also a consideration and the economics can change drastically if the right aircraft is not available for deployment,” Pandey said.
Timing of new flights
Those from the industry are divided on when travellers from both the countries will be able to make use of the expanded flights.
According to Singh, the next summer (March-October 2023) schedule should be the ideal time for the new flights to start. He added that Montreal, Edmonton, Vancouver and Toronto are on the radar of airlines from the two countries because both origin and destination traffic potential to these cities is high.
“Once these markets mature, we could expect spills in the remaining (cities) but that would take some time,” he said.
Baldauf disagrees. He said development and planning for the summer schedule has more or less already been completed by airlines. “The winter 2023/4 (October 2023 to March 2024) could be a starting date for some routes on a lower frequency as the winter market to/ from Canada is traditionally low,” he added.
A questionnaire mailed to Air India, Vistara and IndiGo seeking comment on the new agreement remained unanswered at the time this article was published. Only Air Canada responded, saying: “As currently this is a government announcement, we cannot make any official statement on this yet.”
