Expansion Of Air India Raises Concerns About Airline Flying Rights

On Tuesday, tensions over Air India’s plans to become a global airline with hundreds of new jets erupted as foreign carriers clamoured for increased access to the fastest-growing economy in the world.

Since India’s flag carrier was sold to the financially robust Tata conglomerate, there have been increasing calls for Prime Minister Narendra Modi’s administration to loosen a near-freeze on the capacity that can be deployed on numerous routes to and from India.

According to analysts, the current restrictions on the amount of air travel between India and many markets go back to Air India’s significant losses at the start of the previous decade.

But a significant overhaul of the airline, which included the largest-ever order for aircraft—470 jets—reopened the topic of market access on Tuesday at an aviation conference in New Delhi.

All three airlines—Emirates of Dubai, Turkish Airlines, and Jazeera Airways of Kuwait—called for significant increases in traffic rights to and from India to meet demand. According to an Indian official, Vietnam and Indonesia also want more flights.

“We are not getting enough share from this market,” Turkish Airlines Chief Executive Bilal Eksi told the CAPA India conference. Dubai has requested an extra 50,000 seats a week on India routes.

But the Indian civil aviation minister told Reuters in an exclusive interview that the government is not currently considering loosening restrictions. In order to meet demand without requiring passengers to switch planes, he urged Indian airlines to order more large jets.

“I think it’s about time that our carriers looked at the international market with greater focus. That’s what we are pushing the airlines to do and that process has already started,” Jyotiraditya Scindia said.

Despite having a population of 1.3 billion, most Indians currently fly on foreign airlines for lengthy journeys, frequently changing planes at Gulf hubs.

Now that Air India has returned and a new Saudi airline has launched with dozens of jet orders, the playing field has been reshuffled, leaving Dubai’s enormous international hub flanked by new competitors.

Tim Clark, president of Emirates, welcomed the launches though and asserted that there was enough space for everyone to travel without obstructions.

“There’s so much (demand) there that none of us will be able to deal with it, if we allow unconstrained growth,” he said.

Analysts claim that as part of a larger effort to develop an economic powerhouse, the Indian government is not in a rush to relax the restrictions as it seeks to recover traffic lost to foreign carriers.

“There is clear evidence that the government wants a mega-carrier of size, scale and quality to emerge over the years,” said Kapil Kaul, head of the CAPA India consultancy, adding the refusal to allow more flights for now appeared to be tactical.

“I don’t think they’re even encouraging the discussion … the position whether other airlines like it or not, is ‘we want to build a bigger brand and we want to have a bigger share’.”

With one exception, India has authorized more flights to Russia, according to Rajiv Bansal, the secretary of civil aviation.

Others pointed out that India is not the only country using a post-war system of air traffic agreements to promote development.

“It is not about the airlines; the government is saying it’s about India as a country: ‘we want non-stop flights’,” said Ameya Joshi, founder of air analysis website NetworkThoughts.

“Next year is an election year so it would not make sense for the government to take risks on traffic rights now. Anything that happens is likely to be after the elections.”

(Adapted from BusinessToday.in)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy

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