“The consultations with the industry started before the elections, as there is demand from some airlines as well as airports in India. The plan is to allow increase in foreign flying rights to destinations, where India carriers need to increase flights,” said a government official, who did not want to be identified.
Since it took charge in 2014, the government has maintained that foreign carriers have gained an undue advantage in bilateral foreign flying rights and have built aviation hubs by sourcing traffic from India.
A bilateral air service agreement mandates a limit on the number of seats or flights that airlines can allocate between two countries.
India currently has bilateral air service agreements with 116 countries.
Divided opinions
While consultations on what all countries will benefit are yet to start, the Indian airline industry is divided over the matter.
The international air traffic segment in the world’s third largest aviation market and the fastest growing aviation market has come into the spotlight with Indian carriers such as Air India, IndiGo, and Akasa placing orders of over 1,600 aircraft in the span of around 11 months.
While new airlines such as Akasa Air seek bilateral extensions on exhausted but lucrative markets such as Dubai, older carriers with renewed ambitions have been concerned about liberal bilateral extensions, fearing undue advantage to foreign carriers.
“If we don’t open up Dubai for the next 10 years, I can assure you that airfares to Dubai can reach ridiculous levels… We will continue to petition to increase bilaterals,” Akasa Air founder and chief executive officer Vinay Dube said earlier last week on the sidelines of the CAPA India Aviation summit.
However, the largest full-service carrier of overseas traffic, Air India, with over 13% stake, has reiterated that granting bilateral rights to foreign carriers will impact the growth plans for Indian carriers in long-haul connectivity and the ambition of setting up a global aviation hub in India.
“We are committing to that (new aircraft) on the basis that there would be an economic return to that investment, which, if you add it all, is well over $100 billion. If the rug is pulled from under us, if we can’t fill the aircraft, we will not take them,” Air India chief executive officer and managing director Campbell Wilson said at the CAPA India aviation summit.
Sensing an opportunity, several foreign airlines have firmed up plans to approach the government with their requests.
“Today we have not exhausted the bilaterals, in terms of number of seats per week but we have hit the limit in terms of number of stations,” Sanjiv Kapoor, executive vice-president, strategies of the Saudia Group told Mint.
“The relationship between the two countries is good. We expect that during those recurring discussions, we are hopeful that bilaterals will be expanded in terms of number of destinations and eventually also seats.”
Bilateral pacts
The bilateral air service agreement between Saudia Arabia and India permits designated airlines to operate a total of 20,000 seats per week in each direction, subject to a limitation of 75 frequencies per week.
However, it has limited eight stations in India: Delhi, Mumbai, Bengaluru, Lucknow, Hyderabad, Chennai, Calicut, and Kochi, and three stations in Saudi Arabia: Jeddah, Riyadh, and Dammam.
“We will like to expand to more places such as Kolkata, Ahmedabad…the growth is coming a lot from Tier-2,” he added.
Similarly, Emirates, the largest foreign carrier for India with around 10% stake in the total international traffic to and from India, has also been seeking an increase in bilateral air travel rights between India and Dubai since several years as the carriers on both sides have already exhausted the cap of 65,000 seats per week.
“We have had 65,000 seats in each direction since 2015. That is nine years ago. If you are telling me that Indian market has not grown internally internationally in nine years particularly between India-Dubai market. Really?! The Indian community here is huge and in UAE, it grows all the time. It needs air services. The business case is staring government of India in the face. It is their call,” Emirates president Sir Tim Clark told Mint last week.
According to the latest data from the Directorate General of Civil Aviation, airlines carried 17.3 million passengers to and from India in October-December, with 7.7 million passengers, or 44.5% of the total, carried by Indian airlines and the remaining 55.5% carried by overseas carriers.