Source: The Economic Times, Aug 23, 2011
NEW DELHI: India plans to allow more foreign carriers under an upcoming policy to keep pace with rising demand for international travel that domestic airlines are unable to service.
India has bilateral air service agreements with 97 nations, but about half of them are not being utilised because the routes are unprofitable. Opening the domestic aviation sector to more foreign operators would not only improve international connectivity but also give consumers competitive rates.
The ministry now plans to work on its policy based on air traffic growth projections, the number of nations that remain unconnected and ways to service them with both foreign and domestic carriers. “Why should passengers suffer if domestic carriers can’t provide adequate connectivity? They should be given more choice. We have to align transportation with national needs,” a senior aviation ministry official said, adding that the work on the new policy would start after October.
Experts say the current policy does not make for an open system, as countries get flying rights depending on sovereignty of air space and negotiations.
Also, state-owned carrier Air India is given first preference to fly on new foreign routes. Private airlines get permission only after AI is consulted.
Besides, private airlines must have five years of domestic operations before they can apply for international flights.
A revamp of the existing policy, which would involve consultations between the ministries of external affairs, commerce and tourism, apart from other stakeholders, will not only increase connectivity but also augment international traffic from India. The ministry official said there were no set guidelines on how to capitalise on international aviation.
Experts say allowing more foreign carriers is unlikely to hit domestic carriers.
“Opening up the skies more helps to keep prices in control and makes Indian carriers become more competitive and improve services. If foreign auto, insurance and telecom companies can be allowed, why not airlines?” global consultancy firm KPMG director (aerospace and defence) Amber Dubey said, adding that liberalising the bilaterals might have hurt Air India, but it has definitely helped India as a whole.
Travel technology solutions conglomerate Bird Group ED Ankur Bhatia said: “Any new route initially might see traffic getting rationalised among carriers, but in the long run it is a beneficial proposition for all – local airports, domestic carriers and passengers.”
Bhatia pointed to the tourism and business happening with Eastern Europe and Africa. “Immediately, India needs to be connected with at least 10 more countries, while the number could go up to 70 (from 47) in the next five to six years.”
The five-year waiting period for private carriers has, however, been criticised. Former civil aviation ministry joint secretary Sanat Kaul said, “Young South East Asian airlines take away a lot of international traffic from our country, while our airlines (like IndiGo or SpiceJet) are made to wait for five years. It is an unfair practice and needs a relook.” The ministry official too admitted that the pre-condition on domestic carriers had hampered growth on international sectors. Dubey said, “This rule is not imposed on foreign carriers and is hence distortionary.”
Source: Business standard, Apr 26, 2012
