U.S. regulator upgrades India's aviation safety rating

By Tommy Wilkes

NEW DELHI (Reuters) - U.S authorities have upgraded India's aviation safety rating, in a boost for Indian airlines which can now increase the number of flights they operate to the United States.

U.S. Transportation Secretary Anthony Foxx said on Wednesday that India had taken corrective action to address the Federal Aviation Administration's (FAA) concerns, after the regulator downgraded India's rating to category 2 from category 1 in January last year, citing a lack of safety oversight.

The decision, which takes the rating back to category 1, was expected as Indian aviation authorities had said they were working hard to win back the higher rating.

Foxx did not specify the action India had taken but a person with knowledge of the decision said authorities had recruited more flight operations inspectors and streamlined certain procedures to improve safety.

The upgraded rating is expected to help Jet Airways and state-owned Air India [AIRID.UL], the two Indian airlines which currently fly to the United States. The downgrade had meant both carriers could not increase flights to the country and faced extra checks for existing ones.

"The United States Government commends the Government of India for taking corrective action to address the safety oversight issues identified during the IASA (International Aviation Safety Assessment) process," Foxx said in a statement after meeting with India's civil aviation minister in Delhi.

IMPORTANT DESTINATION

India first achieved a category 1 rating in 1997.

Shares in Jet, which said it had no immediate comment, were down 3 percent at 0926 GMT against a 0.7 percent rise in the Sensex.

An Air India spokesman did not respond to a request for comment.

"The U.S. is a very important destination for Indian travellers. It will have a positive impact not just on our airlines but on the Indian aviation sector in general," said Dhiraj Mathur, who leads PwC's aerospace practice in India.

Air travel in India is growing rapidly as more people fly abroad for the first time, although not as fast as the domestic market where low-cost carriers including IndiGo and SpiceJet dominate.

International passenger numbers to and from India grew 6.9 percent in 2013-14 to 43 million, official data shows, down from the double-digit growth in traffic seen before 2012.

Vistara, India's newest airline, said last week it plans to start flying overseas ahead of an expected change in rules that would allow new carriers to operate abroad.

The FAA's decision comes amid heightened recent scrutiny on aviation safety in Asia. South Korea, Japan and China last month stopped Thailand-based airlines from flying charters and new routes because of safety concerns highlighted by an international audit. The restrictions, though, have been selectively relaxed.

(Additional reporting by Sumeet Chatterjee in MUMBAI; Editing by Muralikumar Anantharaman)