UAE air deal: Redrafted note sent to Cabinet

Incorporates all PMO views on controversy, aviation ministry hopeful of passage

The Ministry of Civil Aviation has sent for approval the redrafted cabinet note on the bilateral air services agreement with the United Arab Emirates, as suggested by the Prime Minister’s Office (PMO), to clear the air on the controversy over enhanced seat entitlements made to Abu Dhabi.

A senior official in the ministry said, “We have made the required modifications and incorporated the PMO suggestions. It should come up for post facto approval soon.”

A controversy had erupted over the decision to increase bilateral air traffic rights to the UAE nearly four-fold to 50,000 seats a week, over-riding recommendations of an Inter-Ministerial Group (IMG) to enhance weekly entitlements by 26,000 seats.

The arrangement has seen strong objections from several political leaders. They have demanded the government reconsider the decision and freeze the agreement, citing adverse impact on operations of India’s airlines and airport operators. The Prime Minister had directed this be brought to the cabinet for a decision “in the interest of wider consultations and greater transparency”.

In a note dated June 13, the PMO said the Cabinet Committee on Economic Affairs note drafted by the civil aviation ministry should mention it had brought certain issues to the notices of the ministers for civil aviation, commerce & industry and external affairs, including the fact that the Department of Economic Affairs (DEA) had reservations about the substantial enhancement being granted to UAE.

“We have responded to all the concerns raised in the letters to the PM. We are also attaching our comments on observations made by the PMO in the meeting on April 22. There is no reason why (it) should not be approved,” said a senior official at the ministry.

The PMO had said besides the DEA, some airlines had opposed the request for enhancement. It had pointed out that private airport operators were not likely to support the enhancement, as they had made a lot of investments in Delhi, Mumbai, Bangalore and Hyderabad and would like to develop these. An added effect of this enhancement would be long-distance traffic from India to North America/Europe would be diverted to Abu Dhabi.

The PMO had said that if an Abu Dhabi-based airline acquired Jet Airways, the entity would control the bulk of the seats on this route. There was a possibility that other countries might make similar requests and, hence, a calibrated approach might be necessary. The PMO additionally asked the ministry to include its comment on the note on ‘Impact of Middle Eastern Carriers on Indian Airlines’ in the cabinet note.

Defending the decision on the allotment of increased bilateral rights to Abu Dhabi, Civil Aviation Minister Ajit Singh had told Business Standard, “In three years starting 2007, as many as 35,800 seats were granted to Dubai without approval from the IMG.

Around the same time, permission for operating weekly flights for Lufthansa was increased to 74 from 50. Indian airlines at the time were flying only seven times a week to Germany. UAE has been a friend for long and is the richest and most powerful emirate. The ministries concerned had to consider various things, including the impact on trade and investment, while granting the traffic rights.” He had ruled out any possibility of a roll-back of the enhanced seat entitlements made to Abu Dhabi.