India's 'go slow' on Turkey, Malaysia ties likely to affect IndiGo, AirAsia

Turkish Airline has a code-share pact with IndiGo, AirAsia owns 49% in AirAsia India

The unintended consequence of comments made by the head of states of Turkey and Malaysia will impact two airlines of India — IndiGo and AirAsia India.  

Malaysian Prime Minister Mahathir Mohamad and Turkish President Recep Tayyip Erdogan had heavily criticised India’s move to revoke special status to Jammu & Kashmir under Article 370 of the Indian Constitution in their speeches at last month’s UN General Assembly.

Sources said that as part of its reaction to the comments by Erdogan and Mohamad, India’s civil aviation ministry has been instructed not to consider requests by Turkey to expand the country’s request for increasing bilateral rights while approval for international operations of AirAsia Berhad is likely to be slowed down.

The move is likely to impact India’s largest carrier IndiGo which has its only codeshare agreement with Turkish Airlines as part of its expansion plan into Europe. As part of the agreement, IndiGo currently sells ticket to 13 destinations (which can be expanded to 20) in Europe beyond Istanbul operated by Turkish Airlines.

“There is informal instruction from Ministry of External Affairs to go slow on all diplomatic and business relationship with the two countries as part of retaliatory measures. It has been sent to all ministries, “said a government official aware of the development.

As part of retaliatory measures, Prime Minister Modi has cancelled his visit to Ankara while India is shunning purchases of palm oil from Malaysia. A codeshare agreement allows two airlines to sell seats on each others' flights in order to provide passengers with a wider choice of destinations.

The current codeshare and mutual cooperation agreements between Turkish Airlines and IndiGo enables passengers of both the carriers to fly to various destinations in India, Turkey and beyond. Significantly, the agreement has been beneficial for Turkish Airlines, as it gets a healthy traffic flow from IndiGo for its extensive network in Europe.

“While IndiGo will now have to look for a stronger partner beyond Turkish Airlines, the impact will be severe for Turkish as it is hamstrung in India without any seat increase for last five years. It now has to ride piggyback on IndiGo more,” the official said. As part of the current agreement, the two countries can operate 14 services per week.

Similarly, approval of international operations for AirAsia India — in which Malaysian carrier AirAsia Berhad hold stake is likely to get delayed as a consequence of the statement by the Malaysian Prime Minister. AirAsia Berhad holds 49 per cent in the airline, while 51 per cent is held by Indian conglomerate Tata Sons. 

The airline’s approval process has now been stuck for more than a year due to an ongoing investigation by Central Bureau of Investigation (CBI), despite it having more than 20 aircraft.

Turkey’s government had last month approached India's Ministry of Civil Aviation last month to start negotiations on a new air service agreement for allocating more airport slots to airlines of both the countries.

"Our authorities have approached the Indian Ministry of Civil Aviation for the enhancement (of the bilateral traffic rights). This is a government-to-government talk,” Mert Dorman, senior vice-president, Corporate Marketing, and Distribution Channels, Turkish Airlines said.