Delta’s recent announcement that it is axing the new JFK-Mumbai route is a reminder of the tough times US carriers have had in India. With American delaying its Seattle-Bangalore route, United remains the only carrier serving India. So why do US carrier struggle in India, despite the massive demand?
History of struggling routes
The last time all three US carriers were flying direct to India was in 2008, with airlines taking advantage of their new 777s for the route. The three carriers served different routes, hoping to generate traffic on the non-stop flights. However, both Delta and American dropped their routes in the next few years, citing overall losses and the low yield on the routes.
But India is a massive market for travel to the US. Over 1.4 million passengers visited the US from India last year, with that number rising in the previous decade. With such high demand, it’s surprising that US carriers were unable to fill their daily services.
Before jumping into why US carriers struggle in India, it should be noted that both Delta and American have faced non-market issues. American cuts its Chicago flight during bankruptcy in 2012, canceling all non-profitable routes. Delta also canceled its Mumbai flight during the global financial crisis, citing lesser passengers and cost cuts.
Competition and cost
The main reason for the tough time US carriers face is intense competition, both from the Middle East Three (ME3) and, more recently, European carriers. These hub airlines can offer more connections and lower fares, attracting passengers from around the country.
The ME3 have been successful mainly due to their reach within India. Qatar flies to 13 Indian cities while Emirates to 9, allowing them to access more population centers and remove the need for domestic connections. Combining this with lower fares enable these carriers to thrive in the notoriously price-sensitive market.
Meanwhile, US carriers tend only to serve the most popular Indian cities, such as Delhi, Mumbai, and Bangalore. While demand is the highest in these cities, it’s challenging to compete with hub airlines on price. Non-stop offerings from the US carriers tend to be much pricier than one-stop flights in Europe or the Middle East, a deal-breaker in the price-sensitive Indian market.
This intense competition pushed US carriers into the red on Indian routes. When American cut its Chicago-Delhi route in 2012, the airline was seeing a $40mn yearly loss on the route, according to The Street. Delta also saw losses on both its non-stop Mumbai to JFK route until 2009 and the one-stop Amsterdam service until 2015. It said competing with the ME3 on one-stop routes was impossible given their reach.
Why are they back?
US carriers have had it rough in their previous trips to India, yet carriers are returning. It should be noted that American has delayed its new route by a year and has not canceled it. Similarly, Delta has not included Mumbai on the 2021 schedule but has been silent about actually cutting the route.
The reason for the return is simply India’s growing market. With passenger numbers from India only expected to rise, US carriers are still hoping to get a piece of the pie. With non-stop flights becoming more popular following the current health crisis, perhaps American airlines could do well in India this time around.
Would you like to see US carriers return to India? Let us know in the comments!