A new civil aviation policy to steer the next stage of development in India's growing air transport sector finally looks set to be approved.
A new aviation policy has been under consideration for several years and is now long overdue, although key elements have already been acted upon, such as making improvements to infrastructure and liberalising international air services agreements.
The policy is now a key step closer to being approved formally, however, following the recent establishment of a so-called Group of Ministers committee that will study a draft policy. No timeframe has been given for the ministers to complete the assessment, but it is likely that formal recommendations will be made in the coming months, paving the way for final approval by year-end.
While the new policy is expected to maintain a ban on foreign airlines owning stakes in domestic carriers, one of the key points is expected to cover an easing of rules to allow more privately owned operators to launch international services. Current rules state that domestic carriers must operate for at least five years before flying abroad.
Civil aviation minister Praful Patel told Airline Business at the Paris air show in June the list of carriers permitted to operate international routes will be expanded at the end of the year to include airlines less than five years old. Five carriers are now permitted to operate international services - government-owned Air India, Air India Express and Indian Airlines as well as privately owned Jet Airways and Air Sahara.
Patel says that with Jet's recent purchase of Air Sahara and the upcoming merger of Air India and Indian "we effectively will have only two international carriers flying in India". He says this is insufficient given the rapid growth in the market and given that Indian carriers now only have 25% market share on international routes to and from the country. "We need to expand the list," says Patel. "We will revisit this policy before the end of this year."
Kingfisher Airlines is particularly confident about winning rights. It has been lobbying the government to overturn the five-year rule since announcing its first widebody aircraft order at the 2005 Paris air show and at the 2007 show it signed a deal with Airbus for the purchase of 30 more widebodies, lifting its total commitment to 50 widebodies for delivery from early next year. Kingfisher has said it would use a US carrier to operate flights to the country if the law does not change. It also recently announced plans for a codeshare with US carrier Continental Airlines.
Low-cost carrier SpiceJet also says it wants to launch international services. It expects the new rules to allow airlines operating domestically for three years to be permitted to serve southeast Asia. It launched services in May 2005. Kingfisher also launched in May 2005 but recently completed the acquisition of a 25% stake in India's first low-cost carrier, Air Deccan, which launched in August 2003.
The new civil aviation policy is designed to provide the framework for further development of the airline sector over the next five to 10 years, following huge growth over the past three years. Patel says the new policy will, among other things, outline measures to boost growth in the air cargo market.
Air India and Indian are, meanwhile, moving forward with their merger and are set to combine subsidiary carriers Air India Express and Alliance Air in the coming months. The Air India Express name will be retained and the enlarged subsidiary carrier will be a low-cost operator with both domestic and international services.
Jet is meanwhile busy integrating its operations with recently acquired Air Sahara, which it is operating as JetLite. The former Air Sahara will eventually stop operating international services and a codeshare between Air Sahara and American Airlines has been stopped.
Source: Airline Business
