The Hindu Business Line : Opening the skies

AFTER 60 YEARS of unremitting regimentation of international air services, there is clear evidence now on the ground that the Government is finally giving up on the control it has had on airlines and passengers. Eighteen months ago came the freeing of flights to Sri Lanka and Nepal, and then to Singapore and Malaysia. Now it seems the Government may well have decided to throw away the leash altogether by signing, almost in a rush, agreements with the United States and the United Kingdom to remove or ease considerably the restrictions on the number of flights and the cities that can be connected. The Open Skies Agreement signed on Thursday with the US means that any "designated" airline of either country can fly as many aircraft each week to as many cities as needed and set fares at any level that the market will bear. All these options were so far subject to review by the respective governments within the framework agreed upon bilaterally. Not only were these stifling the airlines, they were hurting passengers as well for they were denied choice. For instance, Air India was allowed to fly to Los Angeles or San Francisco but not to both. The lack of competition left its own impression on fares, which have stayed well above those on routes visited by competition.

Logically, the US ought to have been a destination with the most flights out of India, given the vast diaspora there and the fact that it is India's largest trading partner. Indeed, an estimated two million passengers travelled between the two countries last year. Yet it was neither Air India nor any of the American carriers that bagged the lion's share of the business, but airlines of Europe and South-East Asia, which used their hubs to ferry passengers between the major Indian metros and the numerous cities in the US, and at a substantial profit too. For the airlines in the US, the market is now well and truly open with the Transportation Secretary, Mr Norman Mineta, promising that an unlimited number of American carriers can now serve an unlimited number of points in India. Already three have announced the launch of flights to cities such as Chennai and Bangalore and a non-stop service between New York and New Delhi.

But is the path as clear for the airlines based in India, especially those privately owned? The use of the phrase "designated airlines" in the agreement is bothersome for it means that the Civil Aviation Ministry still holds the strings. Ever so often in the past the Government has demonstrated its commitment to liberalisation and reform by easing restrictions first for the overseas investor and only thereafter for the Indian. Two years ago, when the Government announced a limited open skies policy for the peak tourist season from October to March, it went principally to benefit foreign airlines because no such freedom was granted to the private Indian carriers, and Air India, in any case, was hamstrung by its inability to enlarge the fleet quickly. It is to be hoped that this time the Government's treatment will be even-handed.

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