The codeshare expansion between Air India and Singapore Airlines shows SIA's ambitions as a second hub

This morning, Air India and Singapore Airlines issued a joint press release about the expansion of their codeshare agreement, the first such development since 2010. Singapore Airlines will hold a 25.1% stake in Air India and Air India Express will fully acquire its own subsidiary.

The expansion will add 11 Indian cities and 40 international destinations to its network and the effective winter flight schedule will begin from October 27. In addition, the two airlines will also mutually offer codeshare flights between Singapore to Bengaluru and Chennai, increasing their reach. The total number of weekly scheduled codeshare connections between the two countries increased from 14 to 56. In both sectors, the operator is Air India Group, the Singapore Airlines Group and IndiGo – making competition tough for the Indian market leader.

Codeshares in India

SIA will codeshare on Air India's domestic flights between Delhi and Amritsar, Bengaluru, Coimbatore, Lucknow and Varanasi; between Mumbai and Ahmedabad, Amritsar, Bengaluru, Coimbatore, Goa, Jaipur, Kolkata, Lucknow and Thiruvananthapuram and between Kolkata and Guwahati.

Codeshares from Singapore

Air India customers have access to 29 destinations across the SIA network. These are Adelaide, Brisbane, Cairns, Darwin, Melbourne, Perth and Sydney (Australia), Bandar Seri Begawan (Brunei), Phnom Penh and Siem Reap (Cambodia), Denpasar, Jakarta, Medan and Surabaya (Indonesia), Fukuoka, Nagoya, Osaka, Tokyo-Haneda and Tokyo-Narita (Japan), Busan and Seoul (South Korea), Kuala Lumpur and Penang (Malaysia), Auckland (New Zealand), Cebu and Manila (Philippines) and Danang, Hanoi and Ho Chi Minh- City (Vietnam). This includes existing codeshare agreements to Kuala Lumpur.

The surprise

Singapore Airlines customers can connect to Air India's international flights to 11 destinations including Copenhagen, Paris, Frankfurt, Milan, Nairobi, Amsterdam, Jeddah, Riyadh, Colombo, Birmingham and London from its three hubs of Delhi, Mumbai and Bengaluru . Singapore Airlines already flies to all destinations except Nairobi, Jeddah, Riyadh and Birmingham.

This shows Singapore Airlines' confidence in Air India and its plans to carry passengers through Air India despite the current negative headlines about the equipment due to lack of upgrades to its hard product.

While the Air India flights from Delhi to London already see the new product with the use of the A350, the other destinations to Europe likely point to sectors where refurbished aircraft would be used in the future.

Such early collaboration could pave the way for a future metal-neutral pact, at least on the metro routes between Air India and Singapore Airlines. A metal neutral pact is an agreement between airlines to share revenue regardless of which aircraft are used on a flight.

Once the flights are on sale, the price will be displayed and whether Singapore Airlines passengers will receive a discount for flights via Delhi on a product that is not currently comparable to the Singapore Airlines product.

This is also a big step for Delhi Airport as it focuses on becoming a hub. International operations at the same terminal will enable faster transfers, but a longer connection time based on current flight schedules – which is planned to codeshare – shows the airport has the potential to increase its revenue from non-captive transfer passengers. This may also need to expand into a larger grocery and retail offering with global brands as opposed to the current ones.

Final note

Singapore is a city-state, and for Singapore Airlines to grow it needs to think differently, especially given low-cost competition from neighboring Malaysia and cost competition from Thailand and Indonesia. India is a large enough market for Singapore Airlines, and the company has often hinted that it is looking at a multi-hub strategy in the future. A multi-hub may or may not mean having two bases for your own aircraft, but a strong partnership with equity investment like Air India.

According to data provided exclusively for this article by Cirium, an aviation analytics firm, there are 310 weekly flights each way between India and Singapore this November. The airlines offer 69,891 seats per route. Singapore Airlines is the largest airline with 32% of all frequencies and 40% of all seats. Together with its low-cost subsidiary Scoot, the Singapore Airlines group has 45% of all frequencies and 54% of all seats in the industry. If you include Air India and Air India Express, it's 74% of all frequencies and 78% of all seats on offer. Rival IndiGo has 25% of all frequencies and 22% of all available seats.

For Air India, as it partners with more airlines and expands its own network, revenue management becomes a complex element in prioritizing what makes it more money and how it uses pricing to build an effective hub serving the East connects with the West, and vice versa.