Govt may review global airline bilateral agreement method

To 'go slow' on talks till comprehensive parameters are reached for determining such pacts

The civil aviation ministry is to study the procedures surrounding bilateral air service agreements, to safeguard India's interests while inking these pacts.

The ministry might also make it more stringent for foreign airlines to pick up strategic stakes in Indian carriers.

Till the study is concluded, the ministry has decided to "go slow" with negotiations for enhancement of bilateral air traffic rights with all countries. Qatar, Malaysia, Egypt and Singapore, among others, have been vying to increase traffic rights to and from India.

A bilateral air service agreement gives countries more access and more seats.

CLEARING THE AIR

• Bilateral air traffic rights negotiations to 'go slow' for now
• Qatar, Malaysia, Egypt and Singapore among countries looking to increase traffic rights with India
• Private deals and bilateral pacts to be kept separate
• Jet-Etihad deal seen as feeding traffic to Abu Dhabi, affecting India's growth as air traffic hub
• Indian carriers may be asked to surrender unused capacity in international sector
• India should be a winner in this and not a loser: Official

The review is being done after controversies surrounding the enhanced bilateral entitlements to Abu Dhabi and the consequent sale of 24 per cent stake in Jet Airways to West Asian carrier Etihad Airways last year.

A senior official in the ministry told Business Standard, "The view in many circles is that commercial terms between Jet and Etihad have been determined such that the Indian carrier would be routing and feeding traffic to Abu Dhabi, affecting India's potential to grow as an air traffic hub. We will look at ways to put in place norms so that such pacts help in the growth of domestic carriers."

In April last year, India had increased bilateral entitlements to Abu Dhabi from 13,300 seats a week to 50,000 a week. The same day, Etihad announced it was picking up a 24 per cent stake in Abu Dhabi-based Jet Airways.

The ministry official said: "We cannot undo the past but would like to ensure that the controversy which surrounded the bilateral deal between India and Abu Dhabi should not happen in future. We will ensure that private deals and bilateral pacts are kept separate. India should be a winner in this and not a loser."

The expansion in the bilateral rights had sparked off a controversy in political circles, with Bharatiya Janata Party leaders alleging the stake sale in Jet Airways was facilitated by the increase in traffic rights allotted to the United Arab Emirates.

They had also raised questions on whether the deal between Etihad and Jet Airways would result in a shift of operational control to the West Asian carrier. The controversy had forced the Prime Minister's Office to ask the civil aviation ministry to seek post-facto cabinet approval of the bilateral deal.

At a recent media event in the capital, responding to a question on whether his airline would have invested in Jet Airways if India and Abu Dhabi had not agreed to a bilateral air service agreement, Etihad Airways' President and Chief Executive James Hogan had said, "The Jet deal has gone through. We have worked through the appropriate process…As a minority investor and also being the first (foreign) airline to invest in an Indian carrier, we were very clear that we had to ensure that we take all the appropriate regulatory and government clearances, and, of course, those are wrapped around by the air services agreement."

To woo more passengers from Indian cities, Jet and Etihad had initially identified eight cities - Ahmedabad, Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Thiruvananthapuram and Cochin - from where Jet will directly fly to Abu Dhabi. Etihad also flies directly from these cities and the blueprint helps it double capacity to handle passengers from these cities to Abu Dhabi, with Jet also pressed into service.

This is to be followed by Jet flying from six more destinations directly to Abu Dhabi in the second phase - Amritsar, Jaipur, Lucknow, Kolkata, Goa and Mangalore. Etihad does not fly directly from these cities, as it is not entitled to do so under the bilateral air service agreements.

However, through its alliance with Jet, it will now be able to deepen its geographical reach in India, currently limited to nine cities.

The ministry is also considering measures to ensure Indian carriers surrender unused capacity in the international sector.

"There are routes on which international carriers are utilising their share of seats under bilateral agreements. But domestic carriers are not utilising efficiently the rights allotted to them. We will examine the factors leading to unutilisation. We will accordingly ask airlines to step up efficiency or surrender idle capacity, because as a country we lose out due to such hoarding," said another official.