The civil aviation ministry is proposing a freeze on capacity enhancement by private carriers on international routes, a proposal aimed at navigating national carrier Air India out of turbulence. The ministry is finalising Air India's seat projections for the next five years and will allocate flying rights to private carriers only after the state-run carrier's requirements are met.
The government grants flying rights on international routes to private carriers on the basis of bilaterals , or air service agreements with various countries. The ministry's insistence on protecting Air India's interests is hurting domestic private carriers , some of whom have already lost airport slots allotted to them at destinations such as Dubai and Singapore.
"It is not that these slots are lost forever but they will now have to be re-negotiated and Indian carriers might not get a good deal," said a senior industry insider who did not wish to be named. Five Indian carriers , including Air India operates international flights. The ministry's decision has disrupted the winter schedule of Jet Airways, IndiGo and SpiceJet that were hoping to start new flights by the end of this month. Domestic carriers have a combined market share of 36%.
Air India is the market leader among domestic carriers with 14% market share followed by Jet. According to an estimate by the Centre for Asia Pacific Aviation (CAPA), private carriers have asked for 60,000-75 ,000 seats per week from the government while international carriers have sought 2 lakh seats per week. Domestic players feel international carriers are profiting at their expense.
"There is a complete freeze of flying rights for the private carriers because of Air India and the international airlines are benefiting from this as they are sucking up the market share," said a top official at a private airline who did not want to be identified because the airline is awaiting permission for expanding its international operations. For its part, Air India is resting its case with the ministry as an airline that, it claims, is being victimised by growing might of private airlines.
It claims that the government has wronged it by allotting traffic rights for international destinations to private carriers in the first place. "No other country in the world has more than one dominant carrier flying international. The government has to take a call if Air India needs to continue as country's government-owned airline or it wants private airlines to keep on growing at Air India's expense," said a senior official at the airline. Aviation analysts like Kapil Kaul of CAPA sees this as another example of policy paralysis.
"Traffic rights are national assets and cannot be considered as assets of Air India. It would be suicidal to develop bilateral strategy from Air India's position (as it) makes $2 billion of losses per year and has accumulated losses and debt of over $20 billion. Traffic rights need to be aligned to India's larger economic and tourist and trade interest," Kaul said.
The civil aviation ministry has been on the backfoot after the Comptroller and Auditor General ( CAG) report blamed it for readily conceding bilaterals to carriers like Emirates, the largest foreign carrier. The ministry, for its part, attributes the delay, to squabbles with the countries it is negotiating with. "There are two steps involved in giving routes to private carriers one we decide how many entitlements we have for which countries and how it should be distributed among different players Right now there are either disputes on the bilaterals issue with the countries where the private carriers want to fly to or we have run out of entitlements.
These countries are in the Middle East like Oman, and Saudi Arabia or those in South East Asia like Singapore. We have just sorted out issues with Sri Lanka," he said. "Private airlines are not protesting giving preference to Air India in international routes as this is not something new. Other countries also give first preference to the national carrier," the ministry official said. Naresh Goyal's private carrier Jet Airways has had to defer its plans to ply new European destinations including Paris.
The carrier earns about 50% of its revenues from its international flights. "In Europe, we have plans for Paris , Frankfurt and Amsterdam. We are seeing where the Gulf carriers are picking the traffic to and from Europe to India. We want to use the airports at Delhi and Mumbai as hubs for traffic to Bangladesh, Sri Lanka, Nepal and South East Asia such as Bangkok, Malaysia and the Philippine. Jet will also look to introduce flights to Shanghai in China ," Goyal had said in June at an international aviation forum.
Similar is the situation with Indi-Go and SpiceJet that are looking to add more flights especially in the Middle East and South East Asia as these routes are suited for narrow body aircraft that are part of their fleets, but the government is not really pulling the strings to make things move for them either.
Carriers such as Emirates, Lufthansa, Qatar Airways and Singapore Airlines have successfully expanded in the Indian market often at the expense of local carriers by offering onward connections via their respective hubs to destinations in US and Europe , currently underserved by the local airline.
For the ministry much hinges on the ICAO Air Services Agreement summit slated from October 17-22 in Mumbai to sort out issues so that it is in a position to grant the routes the airlines are asking for, the official added. The CAPA report says international capacity to/from India increased by 6.6% in October 2011 to almost 7,02,000 monthly seats marking growth of 815% from October 2005 levels and an increase of 587% from October 2007.
Source : The Economic Times
The government grants flying rights on international routes to private carriers on the basis of bilaterals , or air service agreements with various countries. The ministry's insistence on protecting Air India's interests is hurting domestic private carriers , some of whom have already lost airport slots allotted to them at destinations such as Dubai and Singapore.
"It is not that these slots are lost forever but they will now have to be re-negotiated and Indian carriers might not get a good deal," said a senior industry insider who did not wish to be named. Five Indian carriers , including Air India operates international flights. The ministry's decision has disrupted the winter schedule of Jet Airways, IndiGo and SpiceJet that were hoping to start new flights by the end of this month. Domestic carriers have a combined market share of 36%.
Air India is the market leader among domestic carriers with 14% market share followed by Jet. According to an estimate by the Centre for Asia Pacific Aviation (CAPA), private carriers have asked for 60,000-75 ,000 seats per week from the government while international carriers have sought 2 lakh seats per week. Domestic players feel international carriers are profiting at their expense.
"There is a complete freeze of flying rights for the private carriers because of Air India and the international airlines are benefiting from this as they are sucking up the market share," said a top official at a private airline who did not want to be identified because the airline is awaiting permission for expanding its international operations. For its part, Air India is resting its case with the ministry as an airline that, it claims, is being victimised by growing might of private airlines.
It claims that the government has wronged it by allotting traffic rights for international destinations to private carriers in the first place. "No other country in the world has more than one dominant carrier flying international. The government has to take a call if Air India needs to continue as country's government-owned airline or it wants private airlines to keep on growing at Air India's expense," said a senior official at the airline. Aviation analysts like Kapil Kaul of CAPA sees this as another example of policy paralysis.
"Traffic rights are national assets and cannot be considered as assets of Air India. It would be suicidal to develop bilateral strategy from Air India's position (as it) makes $2 billion of losses per year and has accumulated losses and debt of over $20 billion. Traffic rights need to be aligned to India's larger economic and tourist and trade interest," Kaul said.
The civil aviation ministry has been on the backfoot after the Comptroller and Auditor General ( CAG) report blamed it for readily conceding bilaterals to carriers like Emirates, the largest foreign carrier. The ministry, for its part, attributes the delay, to squabbles with the countries it is negotiating with. "There are two steps involved in giving routes to private carriers one we decide how many entitlements we have for which countries and how it should be distributed among different players Right now there are either disputes on the bilaterals issue with the countries where the private carriers want to fly to or we have run out of entitlements.
These countries are in the Middle East like Oman, and Saudi Arabia or those in South East Asia like Singapore. We have just sorted out issues with Sri Lanka," he said. "Private airlines are not protesting giving preference to Air India in international routes as this is not something new. Other countries also give first preference to the national carrier," the ministry official said. Naresh Goyal's private carrier Jet Airways has had to defer its plans to ply new European destinations including Paris.
The carrier earns about 50% of its revenues from its international flights. "In Europe, we have plans for Paris , Frankfurt and Amsterdam. We are seeing where the Gulf carriers are picking the traffic to and from Europe to India. We want to use the airports at Delhi and Mumbai as hubs for traffic to Bangladesh, Sri Lanka, Nepal and South East Asia such as Bangkok, Malaysia and the Philippine. Jet will also look to introduce flights to Shanghai in China ," Goyal had said in June at an international aviation forum.
Similar is the situation with Indi-Go and SpiceJet that are looking to add more flights especially in the Middle East and South East Asia as these routes are suited for narrow body aircraft that are part of their fleets, but the government is not really pulling the strings to make things move for them either.
Carriers such as Emirates, Lufthansa, Qatar Airways and Singapore Airlines have successfully expanded in the Indian market often at the expense of local carriers by offering onward connections via their respective hubs to destinations in US and Europe , currently underserved by the local airline.
For the ministry much hinges on the ICAO Air Services Agreement summit slated from October 17-22 in Mumbai to sort out issues so that it is in a position to grant the routes the airlines are asking for, the official added. The CAPA report says international capacity to/from India increased by 6.6% in October 2011 to almost 7,02,000 monthly seats marking growth of 815% from October 2005 levels and an increase of 587% from October 2007.
Source : The Economic Times
