The Hindu Business Line : Another dose of freedom

REFORM IN THE aviation sector seems to roll out but slowly. Freeing the airline business from the monopoly of the state-owned carriers and allowing the private airlines full play has not come easily to Government, but the good news is that New Delhi is letting go, even if grudgingly. Exactly a year ago, Jet Airways and Air Sahara were allowed to fly to a couple of destinations in South Asia: Colombo and Dhaka. But that permission had come through only a full decade after private airlines began flying the domestic skies. The announcement this week that qualified private airlines can now go beyond those two South Asian destinations represents a huge dollop of liberalisation. The measure could not have been held back. Here we had an Open Skies Policy giving any and every foreign airline, many of them not government-owned, the carte blanche to increase flights into the country this winter. On the Indian side we had the two public sector airlines, Air India and Indian Airlines saddled with ageing aircraft and an inadequate fleet, struggling to provide effective competition to the foreign flags, if at all. Yet, those overseas routes remained closed to the private airlines of this country.

Surely it was not on grounds of competence that the private airlines were being denied. Indeed, Jet Airways has overtaken Indian Airlines in the domestic market and together the private carriers have carried about 63 per cent of the domestic passengers in the first eleven months of 2004, compared with Indian Airlines' 37 per cent. Obviously the Government was keen to retain a measure of protection for the public sector carriers. That is evident in the fact that even in the new arrangement, it will keep the Gulf routes, without doubt the most profitable for Air India and Indian Airlines, closed to the private carriers for the next three years. The restriction is untenable because it is neither fair on the private airlines nor, more importantly, on passengers. Those who fly these routes know very well they have been paying far more than what they would on flights elsewhere over similar distances, the result of inadequate competitive pressure amongst the airlines. These passengers must not be held hostage to the public sector carriers' financial problems.

The Government's maternal anxiety stems from a fear that the beating taken in the domestic market could well await both Indian Airlines and Air India in the international skies. But its response to such a prognosis must not be to offer protective policy gear but to remove the shackles on public sector carriers and give them the operational freedom to respond effectively to the market challenge. The other caveats put in by the Civil Aviation Ministry — eligible private airlines should have at least 20 aircraft, and must have flown the domestic skies for at least five years — reflect the old control mindset and betray the anxiety of the government to retain some of the levers of licensing. Would it impose such conditions on foreign carriers that operate into India?

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