Allowing domestic carriers to fly abroad more

The Ministry of Civil Aviation’s decision to ask Indian carriers to submit their international flying plans over the next 18 months has divided the Indian and international carriers with the flyers wedged somewhere in between.

At one level, the Ministry’s decision is an attempt at “righting a wrong” – allowing Indian carriers to make use of more international rights.

According to the policy, all flights between India and another country are determined on the basis of bilateral air service agreements that the two countries sign with each other.

Advantage global carriers

At the moment, the bilaterals are skewed in favour of international airlines – Indian carriers are able to utilise only about 35 per cent of their bilateral rights while international airlines utilise the rest.

Consider the Government’s 2003 decision of allowing an open-sky policy with the 10-member Association of South East Asian Nations (Asean). The decision allowed Asean carriers a daily flight into metro cities and unlimited flights to 18 other tourist destinations in India.

The move helped passengers as ticket prices came tumbling down. But it impacted the viability of Indian carriers which were not able to keep pace with some Asean mega carriers carrying passengers not only to their countries but also transferring them to the US, Australia, New Zealand and other parts of the world.

Similarly, in April 2008, India increased the number of seats that Dubai could operate to India from 23,000 to 54,200 a week. Airlines from Dubai, like many other carriers, were also allowed to operate into the interior parts of the country and fly passengers from there to any part of the world.

True, Indian carriers were also allowed to operate a similar number of flights to Dubai. But with no strong airport in India to act as a hub, airlines from Dubai emerged clear winners of the enhanced seat entitlement.

So much so that a recent Ministry of Civil Aviation paper shows that of the 37 million international passengers flying to and from India, at least 15 million are being carried by international airlines which are transferring them through a secondary point before taking them to their final destination.

Further, at the moment it is estimated that Indian carriers carry about 35 per cent while foreign carriers carry about 65 per cent of the traffic flying into and out of India.

The new decision will mean that international carriers will not be given any more flights into India while Indian carriers will be allowed to fly abroad. Among the countries to which Indian carriers have been given new flying rights are UAE, China, Nepal, Tanzania, Maldives and Saudi Arabia.

Expanding footprint

In addition the Ministry is also pushing Indian carriers to look at operating to the Commonwealth of Independent States.

Of course, sceptics say given the poor financial health of most airlines in India, where are they going to get the money to fly these additional routes?

This, however, is a pessimistic view as Indian carriers are already expanding their global footprints.

For example, SpiceJet is to launch a three times a week flight between Delhi and Kabul. It will also become the first international operator from Madurai when it starts a flight to Colombo later this year. Also on the anvil are flights to Guangzhou in China.

Jet Airways is planning operations to Dar-es-Salam and IndiGo plans to operate to Jeddah and Kathmandu. Air India too has plans of starting services to Melbourne and Sydney. So in this sense, the time is right for Indian carriers to get more international flying rights.

Crying foul

Understandably, international carriers are crying foul because they want rights to operate more flights into and out of India.

Some international airlines maintain that they are forced to operate flights only to cities mentioned in the bilateral and are not allowed to fly to other cities where there is more traffic potential. Madurai and Pune are cases in point.

Some international airlines claim that their attempts to start services to these two cities are being thwarted by the Government.

International airlines have a point.

Even experts maintain that this policy move is not well thought through as what is hampering the growth of Indian carriers internationally has less to do with flying rights and more to do with domestic policies including high cost of aviation turbine fuel and rising airport costs.

Also consider the fact that there are several countries around the globe to which Indian carriers operate but their carriers do not operate to India. These include Canada (to which both Air India and Jet Airways operate) and Nepal (Jet, Air India and IndiGo).

Critics also point out that Indian carriers are also hampered because they have to follow India’s route dispersal guidelines which stipulate which routes they can operate within the country.

Therefore, Indian carriers would rather operate limited flights internationally and look at making money on domestic routes. This has worked for some. SpiceJet Chief Executive Officer Mr Neil Mills attributed the airline’s profits to a variety of reasons including launching day return flights between several tier II cities.

Of course in this tug of war it is the flyer who is left at a loss.

Take for example Kerala. Since capacity has been restricted, fares to the Gulf region from the State are sky high.

Currently it is not uncommon for a passenger flying between Dubai-Kochi to pay a fare of between Rs 70,414 and Rs 96,878.

A part of this increase is because of Eid, but is it any wonder that international carriers want more rights to fly into and out of Kerala? And why should flyers from this State suffer because the Indian Government has now woken up only now to help Indian carriers?

(This article was published on August 15, 2012)
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