Winter chill hits airline seat sharing pact with Abu Dhabi

The move could impact plans of Jet Airways which had asked for additional 42,000 seats

Air carriers wanting to increase capacity between India and Abu Dhabi will have to wait until next year. For, the civil aviation ministry cannot offer the additional 11,000 seats promised in the new bilateral agreement in the winter schedule (starting October 1).

The delay could impact the plans of two airlines — Jet Airways, which had asked for an additional 42,000 seats, and Etihad, which also wants to fly more capacity into India. But this would come as a relief to others, including domestic carriers connecting India and West Asia, which were fearing a drop in prices if the capacity was increased.

A senior official at the ministry said, “We were to invite airlines to submit their flights plans for West Asian destinations after the agreement was signed with Abu Dhabi in April this year. Based on the individual airlines’ business plans, seat entitlements were to be granted. The re-drafted cabinet note now will be sent in the next one or two weeks. It does not look likely that the redistribution of seats can take place in the upcoming winter schedule.”

In the negotiations with the UAE (Abu Dhabi is a constituent of the latter), the Government of India agreed to allocate an additional 36,670 seats a week over three years. Of the total entitlement, 11,000 weekly seats were to be made available in 2013, an additional 12,800 seats by October 2014 and the remaining 12,870 weekly seats by October 2015.

“Even after seats’ entitlements are granted to individual airlines, it will take a lot of time (for the rollout),” said a senior ministry source. “The airlines would need slots at airports. They would have to furnish details regarding availability of aircraft, pilots and seek clearance from the Directorate General of Civil Aviation. Airworthiness of planes would have to be checked. A lot of paperwork is required, a time-consuming process.”

Jet Airways, which had announced plans to sell a 24 per cent stake to Abu Dhabi-based Etihad Airways, plans to connect 23 cities in the country to destinations across the world through Abu Dhabi, slated to emerge as its new hub. Other Indian carriers had cumulatively asked for an increase of 12,500 seats between India and Abu Dhabi.

If the rollout had happened on time, Abu Dhabi would have got an advantage, with an expanded seat capacity, from this year’s winter schedule over its chief rivals in Dubai (UAE) and Qatar (Doha). The two city-states, whose entitlements have been exhausted, have already made applications for permission to expand seat capacities. However, the ministry has put their demands on hold till next year.

Dubai had asked for an increase of a little over 20,000 seats a week, while Qatar had demanded an increase of 48,000 seats a week. Had the entitlements for Abu Dhabi come this year, as planned, its seat entitlements would have nearly doubled to 24,300, closing the gap with Dubai (54,200 seats) and making it equal to that of Qatar.

The move also allays the fears of some carriers that the additional seats opened would have lead to fares falling in Indian and West Asia carriers.

A senior executive of a top Indian carrier said: “Currently, Emirates and Qatar Airways are only bothered about passengers who fly from their hubs to the US and Europe. So, these airlines have kept their fares on the Indian leg high. With Etihad and Jet now coming in a big way, they would have taken some of this business. as a result, they would have been forced to drop fares on the India leg to woo more passengers. This will force us to reduce fares, too.”

A controversy had erupted over the decision of the Indian government to increase bilateral air traffic rights to the UAE nearly four-fold to 50,000 seats a week, overriding the recommendations of an inter-ministerial group to enhance weekly entitlements by 26,000 seats.

The arrangement has seen strong objections from several political leaders, who had demanded the government reconsider the decision and freeze the agreement, citing among other things the adverse impact it would have on airlines and airport operators in India.

The Prime Minister has put the matter in abeyance, directing it be brought to the cabinet for a decision “in the interest of wider consultations and greater transparency”. The civil aviation ministry is now in the process of re-drafting the cabinet note by incorporating the suggestions made by Prime Minister’s Office.