FIA apprehensive over govt proposal on auctioning flight seats

Flagging serious concern over government's proposal on auctioning of additional aircraft seats other than those covered under various air services agreements, Indian carriers fear that the move would further increase the monopoly of the Gulf carriers.
Besides, the move could also hike international air fares as the additional seats would come with a "price tag" and foreign airlines winning the bids will seek to recover the costs by passing it on to the customers, a member of the Federation of Indian Airlines (FIA) said.
While the number of destinations, routes and seats are decided at government-level talks and the air services agreements between India and various countries, the latest proposal in the draft civil aviation policy provides for auctioning of the seats to meet the additional demand on various international sectors.

FIA comprises four domestic airlines--Jet Airways, IndiGo, SpiceJet and GoAir.
"The auctioning of seats on the international routes other than those covered under the various air services agreements will only provide a greater foothold to the foreign airlines, particularly the Gulf carriers who already have an undeclared monopoly in the Indian market," the FIA member said on condition of anonymity.
Stating that government needs to think in the larger national interests, the FIA member said, adding "the move could also lead to a hike in airfares on the international routes".

The Civil Aviation Ministry is likely to move the draft note for Union Cabinet's approval in the third week of January.

At the same time, the FIA is also opposed to the proposal
of hiking FDI limit for overseas carriers to over 50 per cent as it "apprehends that these carriers will then set up a subsidiary airline here to the detriment of Indian carriers."
"We have already seen how a foreign airline with 49 per cent stake is controlling the Indian joint venture from the backdoor. The government should envision the situation when it allows more than 50 per cent holding to an overseas player," the FIA member said.
"Even mature aviation markets do not permit more than 25 per cent equity to a foreign airline to protect their own carriers," they added.

Pointing out that the government needs to put "safe guards" to protect the local airlines, the member said, "it could be done so by continuing with the 5/20 norms too."
According to the norm, which is under review, only local carriers having five years of operational experience and a fleet of 20 aircraft are allowed to fly overseas.