| The speed with which the Union civil aviation ministry moved on its proposal to throw the Indian skies open and got the Cabinet to clear a new policy should have dispelled all notions that the United Progressive Alliance (UPA) government is not keen on promoting competition in the civil aviation sector.
|
| |
| But that is not how the decision to allow private Indian airlines to fly on all non-Gulf foreign routes has been received in civil aviation circles.
|
| |
| There is a feeling, even within the government, that the decision has been taken in a hurry to suit the needs of some of the private sector players and without taking care of the legitimate interests of the public sector airlines.
|
| |
| Experts are also finding fault with the argument put forward in defence of the new open skies policy.
|
| |
| One of the key reasons cited in support of allowing the private Indian airlines to operate on foreign routes is that while foreign countries are able to utilise their entitlements on flights to India, the state-owned Indian airlines are not able to use their quota because of capacity constraints.
|
| |
| The facts, however, tell a different story.
|
| |
| No foreign country has designated more than two airlines against its quota for flights to India. In fact, there are only a few countries that designate two airlines.
|
| |
| These are the United States, Singapore (two carriers, but on different sectors within India), the United Kingdom, Nepal and Bangladesh.
|
| |
| The example of the United Arab Emirates is considered can exception because this country sends three airlines to India, but that is because of its federal set-up.
|
| |
| The civil aviation ministry has also argued that the state-owned Indian airlines are using only 30 per cent of their quota for flights to foreign countries, while the foreign carriers are utilising 65 per cent of their rights.
|
| |
| But if you ask a civil aviation expert, he will tell you that as much as 45 per cent of the flight entitlements available to Air-India and Indian Airlines from the 100-odd bilateral air service agreements are not commercially viable.
|
| |
| These include flights to about 65 countries like Uzbekistan, Turkmenistan and Kazakhstan. The utilisation of the remaining entitlements by the Indian airlines is about 50 per cent.
|
| |
| And this is because the state-owned Indian airlines continue to suffer from an acute capacity constraint. Both Air-India and Indian Airlines have been wanting to increase their capacity.
|
| |
| But the proposal for acquiring new planes has been hanging fire for at least a decade or so. If the government had taken an early decision allowing Air-India and Indian Airlines to increase their fleet it is possible that the utilisation of flights entitlements in commercially viable markets would have been higher.
|
| |
| It can be argued that with the permission granted to Indian private airlines to fly on foreign routes, India’s utilisation of the flight entitlements under bilateral agreements would improve.
|
| |
| But that increase would be reflected only in the commercially viable markets in 35 countries. Just as no airline wants to fly to the uneconomic north-eastern routes in India, the private Indian airlines will not be interested in the flight entitlements to these 65 countries, where utilisation would continue to be low.
|
| |
| There is yet another reason why eyebrows are being raised over the civil aviation ministry’s new policy.
|
| |
| The ministry has argued that the proposal to allow private Indian airlines to fly on foreign routes has already received the endorsement of the Naresh Chandra committee that had outlined a roadmap for the civil aviation sector.
|
| |
| But this committee had made several other recommendations including those to strengthen the state-owned airlines by enhancing their fleet capacity. So far no one knows the government’s final view of the Naresh Chandra committee recommendations. But the ministry has picked up one specific recommendation of the committee and got Cabinet approval. What happens to the other recommendations no one knows.
|
| |
| For instance, there is no explanation of why the new policy should emphasise synergising the operations of Air-India with Indian Airlines, as a result of which Indian Airlines would be concentrating only on the domestic market and not aim for a share in the larger pie that is being thrown open to its domestic private sector competitors like Jet Airways and Air Sahara.
|
| |
| The consequences of shutting Indian Airlines out of the foreign routes can be adverse for the state-owned airline.
|
| |
| It will lose out many foreign passengers in the domestic sector to Jet Airways, which can now tie them in with the help of their new flights on foreign routes.
|
| |
| This is not to argue against more competition in the civil aviation sector. More Indian airlines flying on foreign routes will mean more seat availability, better fares and hopefully improved service.
|
| |
| But the logic of barring Indian Airlines to compete with the private Indian airlines on the foreign routes is not convincing.
|
| |
| More than six months before the Cabinet decided to allow private airlines to fly on foreign routes, Jet Airways had applied to airports in London, Singapore, Kuala Lumpur and Bangkok to reserve landing and take-off slots, in anticipation of a policy change.
|
| |
| Within two weeks of the Cabinet decision, Jet Airways also filed for an initial public offer of its equity.
|
| |
| The advance work and preparedness of Jet Airways to take advantage of a policy change brought about by the civil aviation ministry will always be talked about in India’s corporate sector. They will also raise many uncomfortable questions. |
| |
|
| |
Content Guide
