Whether or not the Jet-Etihad duet finally gets to perform on the stage is still not certain, but, in recent days, the theatre of Indian civil aviation has been enlivened greatly.

The collaboration of Asia’s biggest low-cost carrier, AirAsia, and the Tatas in floating a new airline will, if nothing else, spur competition in the Indian skies and, of course, help the average flier.

As the India-born founder of AirAsia, Tony Fernandes, said while announcing the three-way joint venture (the third party being Telestra Tradeplace, belonging to the extended family of the steel magnate Lakshmi Mittal): “We have carefully evaluated developments in India over the last few years and believe that the current environment is perfect to introduce AirAsia’s low fares”.

Cheap air tickets

Some observers would say that the best proof of the validity of Fernandes’ point of view is to be found in the recent decision by Jet Airways to slash fares, a move that was quickly followed by other carriers such as SpiceJet, GoAir and IndiGo, which indicated that there was, in fact, scope for such action whatever its immediate impact on the bottom line of the carriers concerned.

However, there is another school of thought which feels that the Jet move was tied to its ongoing negotiations with Etihad which, some reports suggest, have run into problems and, therefore, required a diversion (also for shoring up the share-value of the airline).

This may be so, but the fact remains that there is a huge market in India for cheap air-tickets, which Tony Fernandes has sought to tap with the help of Indian partners.

Incidentally, the fact remains that the slashing of fares by Jet followed the Fernandes announcement, although it remains to be seen whether the decision to lower fares (to past levels which boosted the volume of domestic air travel to dizzy heights) can be maintained till the new AirAsia joint venture takes to the skies perhaps next year.

Neutral attitude?

Whatever the course of future developments, there is no doubt at all that the AirAsia-Tata-Telestra entry will boost competition in domestic civil aviation, the important thing here being the fact that the Government of the day is seen to be encouraging the development. But, on a closer look, can it be said that the benign attitude of Ajit Singh’s Civil Aviation Ministry is truly neutral, and that it really has a hands-off policy as far as the fare and expansion decisions of the airlines are concerned?

The Minister has said that the Government does not regulate airfares, that it was indeed setting up a cell to monitor fares, “but monitoring was different” from regulation. But what about allowing airlines to expand freely, particularly airlines which are doing well in a difficult domestic flying environment?

The obvious example here is the IndiGo programme to expand its fleet, which has been checked by the Civil Aviation Minister on the plea that the Government is preparing new norms for air-connectivity within the country and that, under them, “it may be mandatory for all airlines to have smaller turboprops in their fleet to fly to smaller towns”.

Ajit Singh has reportedly argued that, given the future requirement-dispensation, “an airline can’t just have Boeing 737 or Airbus 320 and will need to have smaller planes also to fly to smaller cities”.

This may be so, but why does not the Minister just “monitor” here also instead of indulging in “regulation”? Inevitably, it is being suggested that fetters are being deliberately put on the expansion of a successful airline in order to protect the laggards who are finding the going much more difficult in current flying conditions.

This will, of course, be dismissed outright by the authorities concerned, but can the nation forget the (successful) campaign that was launched in the nineties by interested parties to prevent the Tatas from entering the Indian skies with the help of Singapore Airlines which, among other things, would have helped the Indian flier no end?

(This article was published on February 27, 2013)
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