India's government is further opening up the marketplace and allowing privately owned carriers to fly to more international destinations in direct competitionwith state-owned Air India and Indian Airlines.
The government is, meanwhile, formally scrapping a long-criticised policy under which foreign airlines were forced to make payments to Air India in return for increased traffic rights. Under the changes, which were approved by the country's cabinet late in December, privately owned Indian scheduled carriers meeting certain criteria may now operate on any international route other than those to the Middle East. Restrictions on Middle East services are to be dropped after three years.
The two eligible private carriers, Air Sahara and Jet Airways, were restricted from operating internationally until a year ago, when they were given approval for services to countries in the south Asia region, such as Bangladesh, Nepal and Sri Lanka. Both have long been lobbying for rights to fly to more international destinations and are expected to start with services to points in South-East Asia, such as Singapore. They are to be the only eligible carriers for some time, as the government has set a new rule that only scheduled carriers with a minimum of five years of continuous operations and having at least 20 aircraft will be allowed to operate outside the country.
These rules have already been criticised by fast-growing low-cost carrier Air Deccan, which launched scheduled domestic services in August 2003. Its managing director, G R Gopinath, says the airline has no desire to fly internationally, but he "questions the rationale behind a five-year operational track record. The passengers' concern today is not how established the airline is, but the safety record of the airline. We should not have different standards - if we can fly from Cochin to Delhi, why not Cochin to Dubai or any other similar sector?"
Air Deccan's complaints aside, the policy changes do represent another significant easing of long-restrictive civil aviation regulations. In recent years the government has been progressively liberalising and observers believe there is now no going back to the days of heavy restrictions and protectionism for Air India and Indian Airlines.
The changes were unveiled after a government-appointed committee studying civil aviation reforms recommended early in November that additional international rights be granted to privately owned airlines. It is estimated that state-owned Air India and Indian Airlines use only 30% of the traffic rights available to Indian carriers under air services agreements with other countries.
Another clear sign of the continuing opening up, say observers, is the formal scrapping of the controversial policy of forcing foreign airlines to pay Air India by way of so-called "commercial agreements" in return for increased access to the country. Air India has long argued that the requirement is necessary as it has been unable to expand its fleet and become more competitive in large part due to government bureaucracy, and as a result it must be compensated.
The government now says: "With a view to encouraging greater connectivity, creating a level playing field, reducing passenger tariffs and ensuring viability of operations, the practice of demanding compensation from foreign airlines by way of commercial agreements mandated by the government will be discontinued. All new operations by foreign carriers, both on new destinations as well as on existing routes, will be free from the obligations of the mandated commercial agreements. All existing government-mandated commercial agreements will be reviewed and phased out over the next five years."
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
