Differences have erupted in the aviation industry over the government’s policy of not increasing flying rights to other nations.
Global airline CEOs say the policy stifles capacity expansion and hurt consumers. Home grown. Tata-owned Air India, on the other hand, is said to be in favour of the freeze as it plans to increase direct connectivity through long haul flights.
Air India has put in an order for 70 wide body aircraft with which it aims to increase flights to Europe and US.
Sources said that market leader IndiGo and new entrants like Akasa want an expansion of flying rights as they want to launch new flights. “IndiGo with its huge fleet needs more international rights while Akasa which will launch international flights by end of this year has limited options,” a senior executive of an airline said.
In the absence of flying rights to destinations like Dubai, Singapore, Akasa will have to look for less lucrative destinations like Oman and Dammam, Saudi Arabia.
Akasa Air CEO Vinay Dube said while his airline is ready to look at alternate destinations, there needs to be a review of bilateral rights.
Flying rights are allocated on a bilateral reciprocal basis. For most Middle East countries, Indian carriers have been unable to utilise their quota while foreign airlines have exhausted theirs. In 2016, India in its National Civil Aviation Policy framed the guidelines saying that unless the utilisation from the Indian side reaches 80%, additional flying rights will not be granted.
In the case of destinations like Dubai, Sharjah, Jeddah however both sides have exhausted their quota.
Speaking to ET, on the side lines of CAPA India Aviation Summit, top bosses of major airlines like Emirates, Turkish Airlines sought an increase in traffic rights and called the move of Indian government as protectionist which will hurt consumers.
Bilal Eksi, CEO of Turkish Airlines said that while he sees nothing wrong for a country to frame its own flying rights policy, too much protectionism discourages competition and hurts consumers. “Competition should be encouraged giving options to passengers so that airlines strive to improve their service standards. If you protect a child too much, he doesn’t get prepared for the world,” Eksi said.
Currently, 3,000 seats each can be offered per week on both ways between India and Turkey. These have been exhausted from Turkey’s side as Turkish Airlines operates 14 times a week to both New Delhi and Mumbai from Istanbul. But the utilisation from India remains low as IndiGo is the only airline to have flights to Istanbul. “We want to launch more flights as there is huge demand. If tomorrow I am allowed to operate more flights, I can easily fill two aircraft,” Eksi said.
Emirates president Tim Clarke said Dubai was one of the biggest international market for all Indian carriers including Air India.Sixty five per cent of international flights operated by Indian carriers come to Dubai. “If you don’t expand capacity, the losers will be the Indian citizens and the carriers will lose 800 to $900 million worth of income every year,” he said.
Government officials said India’s apprehension comes from the fact that cash rich Gulf airlines with their large wide body fleet will exploit the sixth freedom rights which allows it to fly Indian passengers to Europe and North America via their home country like Dubai, Abu Dhabi and Doha.
On the contrary, Indian carriers which don’t have enough wide bodies stick to flying between India and Middle East where the ticket value is lower.
The last increase in flying rights to UAE came in 2013 when the UPA government agreed to increase it by four times from 13,330 seats to 50,000 seats per week.
“We want Indian airlines to have their wide body fleet so that Indian airports can develop their own hub. We have 86 international carriers coming into India and only 5 Indian carriers taking people to international destinations outside India. These 5 carriers that fly overseas hold only 36% market share. We have to look at increasing international to international traffic.” civil aviation minister Jyotiraditya Scindia had told ET earlier.
Indian airports are also apprehensive about the freeze in bilaterals as they have undertaken massive expansion projects and now fear that capacity will not be utilised.
“India has strong, successful, and high-quality airlines and don’t need not be shy of competing with foreign airlines. Our business case is based on the premise of growth. It is in our interest and everyone else to see growth in domestic and international traffic,” Christoph Schnellmann, CEO of Noida Airport which is looking to open in 2024 said.
Airports like Hyderabad and Bengaluru have invested in huge capitals and expanded their terminals. Indian carriers except Air India are yet not prepared to launch more international flights. “The government should look at granting ad-hoc bilateral rights to foreign airlines till the time Indian airlines are ready. Otherwise, the additional capacity will lie idle leading to loss in business,” an executive of a private airport said.
Experts said that the government is likely to maintain the stance for one to two years to encourage Indian airlines. “The government has a clear view on this subject. As a tactical move, it wants a mega Indian carrier of size, scale and quality to emerge over the years. I don’t see this changing soon,” Kapil Kaul, CEO, India of CAPA.