On October 31 2010 Air India bid farewell to its short-lived European hub at Frankfurt Airport, in Germany. Air India had established a hub in Frankfurt only 17 months before its closure, however despite referring to the Frankfurt hub as “crucial” the airlines’ expansion, Air India quickly determined that the hub inefficient. With the airline coordinating the arrival of five Boeing 777-337/ERs long-haul international flights, despite not having access to enough gates to service all five flights at the same time, Air India complained that Frankfurt Airport was too expensive and not cost effective … despite knowing all the costs and gate access issues when they chose Frankfurt as a hub.
Frankfurt served as a “scissor hub” for Air India, with flights arriving and departing from Chicago, Newark, Ahmedabad, Delhi and Mumbai … although in practice the airline did not utilize the hub effectively to transfer passengers from point to point, with limited connection city options. A further issue with Air India’s use of Frankfurt is that the airline saw Lufthansa as a competitor at the same time it sought to join the same airline alliance, Star Alliance. Had Air India remained in Frankfurt it could have maximized its potential with its future partner airline … but the hub is closed … and now Air India is looking to establish another hub in Europe.
Where has Air India decided to look for its new hub? Dublin, Ireland. Dublin Airport has been revitalized, having just opened its new Terminal 2 on the 19th of November 2010; just days after Air India closed its hub in Frankfurt. Terminal 2 is a modern 810,000 square foot facility, capable of handling upwards of 15,000,000 passengers annually and another pier to be built further adding more capacity. Additionally, Dublin can offer US Immigrations & Customs pre-clearance into the United States, allowing passengers to arrive as “domestic passengers.” Financially Dublin Airport offers some of the lowest costs for airlines operating in Europe.
As attractive as may seem, Dublin Airport has seen a roughly 10% drop in its passenger traffic over the past year and they are working to lure new service, new airlines and explore new options all at the same time. When United Airlines & Continental Airlines were discussing merging, Continental’s CEO (now United CEO) referred to US Airways as the “Ugly Girl,” however in this case Dublin Airport seems like the “desperate girl.” … and this leads to the central question at hand … does opening a hub in Europe still make any sense for Air India?
Air India for starters does not currently serve Dublin; so establishing a hub in a new destination is a major investment in time, human capital, financial capital and building brand awareness.
If Air India plans to service the North America-India market via Dublin there are a number of obstacles. While Air India intends to use 5th Freedom rights that would allow them to fly passengers from originating in Dublin to the United State, the airline will then begin competing against its own non-stop service to India from US markets. If the airline wants to fill planes for US-Europe destinations, it should revisit its now ceased New York-London route that was fairly popular due to superior connection options. Air India exploring its 5th Freedom route options however does not address the fact that the US-Ireland market is saturated with multiple options and that Air India would lose ground on not only the US-Ireland market, but the US – India market where there are a number of non-stop options from a variety of US major hubs.
Some statements from Irish Minister for Transport, Tourism and Sport Leo Varadkar sound like used car salesmen tactics, furthering the “desperate girl” perception, such as the repeated comments that the airport is in talks with other private Indian airlines regarding establishing a hub in Dublin. These comments come across like the tactic of “if you don’t buy the car now, it may not be here when you come back.”
Air India exploring Dublin Airport as a hub faces some technical challenges, the maximum length of the longest runway at Dublin Airport. Boeing states that a minimum of 8,500 feet of runway is required for the takeoff of a Boeing 777-300/ER, at ‘basic take off weight’, at 86ºF(30ºC) at sea level. Dublin Airport’s longest runway, Runway 10/28, us 8,652 feet, at 279 feet above sea level. Granted temperatures are likely to rarely be a factor in the take off requirements, however Air India indicates the intentions of operating the aircraft from Dublin heavy on cargo to maximize profits, pushing the aircraft past the ‘basic take off weight’ closer to the ‘maximum take off weight’ of 775,000lbs for the 4,404 mile flight to Delhi and 4,729 mile flight to Mumbai. Is only 162 feet of additional runway length past the minimum operating specifications enough to account for changes in weather, cargo weight and other factors?
If Air India chooses to operate flights under weight restrictions from Dublin Airport, they are automatically leaving potential revenue aside, when choosing a more suitable airport would allow them more flexibility in how they plan to operate their aircraft.
Of all the factors regarding Air India’s exploration of Dublin Airport as a hub one factor leaps out as the biggest problem, believe it or not, a bigger factor than the length of the runways at Dublin Airport … the airline is seeking to join Star Alliance in 2011, after their previous delays in entering the alliance. Dublin as a hub would isolate Air India from connecting their passengers to European alliance partners at their hubs, such as Lufthansa in Frankfurt and Munich, BMI in London, SAS in Oslo, Stockholm and Copenhagen, SWISS in Zurich or Brussels Airlines in Brussels.
Air India is in significant financial trouble, spending an average of 158.33% more than it earns daily. With the airline losing a significant amount of money every day, spending money on a hub, especially one that alienates them from their future alliance partners makes no sense financially or strategically.
Management at Air India is not in the position to open a European hub simply for the bragging rights of saying they have a European hub, those days are long gone. The airline must focus on the basics right now … making money and retaining loyal passengers.