PDF: 2962 pages, 5.2 MB - Bay Area Council Economic Institute

Two-Way Trade: Slow but Steady
For leisure travelers to and from India, a long flight and an expensive plane ticket limits the
number and mix of passengers. It also encourages a longer visit, which favors staying in a family
home, a common practice given the large Indian population in the state. Complicating matters
further are language and religious dietary requirements, both on the flight and upon arrival.
The San Francisco Visitors and Convention Bureau believes that, as India’s middle class grows,
and as two-way business and investment ties increase, the Bay Area is a natural destination for
both leisure travelers and new convention business. It is so convinced, in fact, that it set up a
representative presence in New Delhi in August 2007 to begin laying the groundwork with airlines
and tour operators.
Bureau vice president for tourism Deborah Reinow says the key to jumpstarting visitor traffic
from India is expanded, direct air service. “All major markets start as a VFR (visiting friends and
relatives) market,” she says. “The first people that travel as flights are added are in the discount
seats at the back of the plane plus the high-end business travelers. The whole picture is going to
change when we have non-stop service from SFO.”
The recent deregulation of India’s civil aviation sector has spawned several new and highly competitive
airlines, including Jet and Kingfisher.
Jet Airways launched a SFO-Mumbai service via Shanghai in June 2008, for a total travel time of
26 hours. But by October, difficulties with Chinese civil aviation authorities in Shanghai and
financial issues at home led Jet to suspend the San Francisco service. Kingfisher Airlines also
planned to begin direct SFO-Bangalore service in 2008, using its recent acquisition of low-cost
Indian carrier Deccan Aviation to meet a government requirement that a carrier fly for at least
five years before it can offer international flights. Kingfisher had moved New York staff to San
Francisco in preparation for the new service, but has faced financial issues similar to Jet’s and as
of late 2009 had not launched service.
India’s national carrier, Air India, has had plans to introduce service to SFO since 2004—first a
New Delhi/Mumbai service via Frankfurt and, more recently, direct Bangalore flights three times
a week. It opened a sales office in downtown San Francisco in 2006, but it has yet to initiate service
and its plans remain unclear.
Direct service and more service choices should improve the travel experience, help reduce the
price points for travel in both directions, and expand the volume of non-business and family
travel. A second hurdle, Reinow says, is lining up airline and independent tour organizers in
India, and matching them with tour operators and ground handlers (itinerary planners, guides,
bus drivers, baggage handlers, etc.) in the Bay Area. The Bureau has hosted events for travel
professionals in New York and Los Angeles. It is also working with the Receptive Services
Association, a tour operators’ trade group, to address payment and other past concerns, and
to persuade them that the Indian travel landscape is changing.
Indians and Indian-Americans play a particularly large role in the U.S. hospitality industry.
The Asian-American Hotel Owners Association (AAHOA) estimates that Indian-Americans
(primarily from the state of Gujarat) own 43% of the nation’s 47,000 hotels and motels, typically
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