The world's two most populous nations, China and India, have signed a more liberal air services agreement that they hope will lead to a substantial increase in flights.
The agreement between the fast-growing economic powerhouses was signed during a state visit to India by China's leadership on 11 April. It allows for many new passenger and cargo services, not only between the two countries, but beyond.
Air services between the two sides are currently highly limited, despite the fact they are becoming increasingly important trading partners. Carriers that operate passenger services between the two countries are Air India, China Eastern Airlines and Ethiopian Airlines.
Under the terms of the new memorandum of understanding on civil aviation, which took immediate effect and replaced a 1997 accord, multiple airlines from each side can operate passenger services from any point in their home country to any six points in the other country. They can also operate fifth freedom, or beyond, passenger services to any three points in other countries provided no more than two of these destinations are in one geographical region.
While there will still be some restrictions on the number of passenger services that can be operated by designated airlines from each side, the new agreement provides for unlimited cargo rights for airlines from both sides. The Indian government says the open capacity arrangements for dedicated cargo services cover flights between the two countries as well as beyond.
The agreement comes as both countries have been seeking to open up their air service regimes to new competition. Over the past two years, both countries have significantly eased restrictions in air services accords with key trading partners and industry observers saw it as only a matter of time before they agreed to liberalise their own outdated bilateral pact. The old agreement capped at just seven the number of weekly flights operated by two airlines from each side, to two destinations.
Both have said they recognised the outdated agreement was holding back development between the two sides, which have been seeking to improve relations after years of mistrust and occasional border disputes.
A new bilateral was needed, says the Indian government, as "due to a lack of sufficient direct connectivity, business travellers and tourists were forced to travel through third countries". This is despite "rapidly expanding trade and tourism links between the two countries". India's minister of commerce and industry, Kamal Nath, says China is on course to becoming its largest trading partner.
Annual trade between the two countries has now passed the $12 billion mark, up from under $1 billion a decade ago, says Nath. "Barely two decades ago, the world perceived China and India as large but poor developing countries. There has been a sea change in this perspective. And this change of mindset has been driven by emerging economic realities. If we are to build upon this, then the scope of our economic engagement has to be enlarged and diversified."
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
