The Hindu Business Line : For airlines, sky is the limit

IN the New Year, Indian Airlines (IA) and Air India (AI) could move closer to getting new aircraft while the private sector airlines are likely to achieve their objective of flying abroad.

While later this month the Union Cabinet is expected to clear a proposal to allow the scheduled private sector airlines to start operating to foreign lands, the much-awaited fleet expansion plan of IA is expected to move forward with the Public Investment Board (PIB) meeting scheduled for January 29.

Sources indicated that IA is likely to be given the nod to acquire up to 30 aircraft with the option of getting more aircraft at a later date. However, there is still a question mark on whether the fleet acquisition plan of the airline will get affected by the General Elections which are to be completed by the end of April. In March 2002, the IA board had cleared a proposal to acquire 43-Airbus aircraft including Airbus A-319, A-320 and A-321.

Besides, the 28 aircraft acquisition plan of AI which was approved by its board in November last year is also expected to be cleared by the Government. Official sources indicated that with the financial health of the Maharaja being better than IA the acquisition plan is unlikely to face too many hurdles. Similarly, the dream of the private sector scheduled airlines to fly abroad and not only to the six nations of the South Asian Association of Regional Cooperation (SAARC) is also likely to be achieved soon.

Officials sources indicated that the proposal, which the Union Cabinet is expected to examine later this month, is to allow private sector scheduled airlines to fly abroad on the unutilised rights of AI and IA.

However, the private sector airlines will not be allowed to operate to the Gulf region primarily because the two State-owned airlines are already utilising most of the existing air services bilateral agreements.

It was a joint communiqué issued in October last year at the conclusion of a visit of the Sri Lankan Prime Minister which provided a window of opportunity for private sector airlines to fly abroad. The communiqué talked about "encouraging" private sector airlines to operate to airports in the island nation. However, when the proposal was sent to the Union Cabinet it was decided that the airlines should be allowed to fly not only to Sri Lanka but also other countries in the SAARC region, including Pakistan, Nepal, Bangladesh, Maldives, Nepal and Bhutan.

Though technically the two State-owned airlines will have the first right of refusal after the Cabinet approves the proposal to allow private airlines abroad, there is little doubt in the minds of market watchers who apart from the passengers will stand to benefit from the move.

Already the private sector airlines, including Jet Airways and Air Sahara, have announced plans to start operating to Colombo, and are awaiting the formal Government notification before taking to the skies. While Jet Airways plans to operate a daily flight from Chennai apart from operating five times a week from both Mumbai and Bangalore, Air Sahara plans to operate a daily flight from both Chennai and Mumbai. Perhaps, realising that competition is on its doorstep, AI and IA have initiated steps to synergise their operations. During 2003, AI and IA worked out an agreement whereby passengers holding the ticket of any of the two airlines could travel by an aircraft operated by the other on some sectors.

The need for doing this probably becomes clearer from the fact during the financial year 2002-03 IA, which is primarily a domestic airline, carried more international revenue passengers than domestic revenue passengers. Despite the year being young the foundation for a bright future for the sector seems to have been laid.