New formula seeks to give wings to foreign airlines’ India expansion

NEW DELHI: Foreign airlines will now be able to offer more seats on routes to India in cases where domestic carriers have not been able to utilise even one-third of the capacity as per their entitlements under bilateral air services agreements.

A committee of secretaries has issued an order to this effect, devising a new formula to calibrate the opening up of Indian skies to genuine demands of overseas carriers. The panel, headed by the cabinet secretary, was constituted to discuss reforms in bilateral air services agreements, including auctioning of rights.

“With countries where Indian carriers have not utilised even one-third of the total seat entitlements and do not have any immediate plans, the panel is of the view that bilateral entitlements should be increased,” said an aviation ministry official, who did not want to be identified.

‘Long-Term Strategy Needed’
The committee has also suggested a formula for increasing bilateral entitlements of foreign carriers in such cases, the official said. “The committee has suggested selecting the higher one between a flat increase by 10% of the existing capacity and the average of the growth in the past three years in that particular sector,” he said. Malaysia would be an immediate beneficiary of this order, according to the official, while Qatar would not become eligible for an increase under the scheme because the utilisation by Indian carriers on that route is about 66%.

Analysts, however, said the move did not constitute a long-term strategy. “This could, at best, be termed another incremental move, which may be another short-term measure. It may not benefit many countries seeking more traffic rights,” said Kapil Kaul, CEO of aviation consultancy firm CAPA South Asia.

“The country cannot have open skies for countries beyond 5,000 km radius and very restrictive regime below this threshold. The government should have a long-term policy, which is not complex. We may also need a policy for allocating traffic rights for Indian carriers as we will soon have seven airlines flying international.”

Under the civil aviation policy, the government announced open skies for countries beyond 5,000 km radius. However, for countries within 5,000 km radius, any increment in bilateral entitlements will happen only if Indian carriers utilise 80% of the existing bilateral seat entitlement quota.

“The decision in the aviation policy on 80% utilisation for the increase and open skies for countries beyond 5,000 km is a clear and a long-term policy,” said another civil aviation ministry official. Despite the clarity in the formula, the ministry is sitting over a proposal to increase bilateral seat entitlements between India and Dubai, where both Indian and Dubai-based carriers have utilised 100% of the existing quota.