Foreign airlines allowed to operate at cost of Air India

August 8, 2009 - 0:0

NEW DELHI (The Economic Times) -- After the Cabinet Secretariat ordered a freeze on granting rights to foreign airlines for operating their flights on profitable routes to and from India, Congress has started training its guns on NCP leader Praful Patel for emasculating the national carriers during his tenure as the civil aviation minister.

Concern over the health of the national carriers has been growing across the country. The worries mounted after the ministry sought Rs 2,500 crore in equity to enable Air India to tide over the crisis.
A section of civil aviation experts blame the generosity displayed by the government in granting permission to foreign airlines to operate their flights on lucrative routes (known as bilaterals) — a factor which has contributed in good measure to the sharp drop in the revenues of Air India and erstwhile Indian Airlines.
In response to a starred question in the Lok Sabha on Thursday, the civil aviation minister pointed out that in the summer of 2004, when NDA government demitted office, foreign airlines operated 711 services every week to and from India, which had increased to 1,315 services every week by this summer.
“Correspondingly, the number of passengers has risen from around 14 million to 27 million to and from India in that period. The increase is around 90%,” the minister replied in the written statement.
The practice has resulted in a phenomenal increase in weekly seat capacity into India in the last four and a half years. Between December, 2003 and June this year, the figure shot up by 10.36 lakh, or a whopping 356 percent. All of this, of course, was at the expense of the national carrier.
The market share of Air India and Jet Airways, for instance, on the money-spinning Persian Gulf routes earlier was 40-50%, but has plummeted to 10 percent in recent times.
The airlines originating from Gulf countries, according to these experts, have gained immensely in the process. With the ministry becoming liberal in granting rights to these airlines to operate their services from more than one point of call from within the country, the national carrier has found its elbowroom constricted. Emirates and Qatar Air operate flights from 12 airports dotted across the country, while Gulf Air and Etihad fly from 9 airports each.
Mr. Patel, in his reply to the question asked by Mr. Sanjay Nirupam, the Congress MP from Mumbai North, justified the policy on bilaterals.
“Traffic rights for operation of international air services are specified in bilateral air service agreements concluded with the various foreign airlines and is part of an on-going process, depending upon traffic demand, balance of benefit to Indian carriers, overall interest of Indian economy, together with diplomatic and political considerations” the civil aviation minister observed.
“Liberalisation in international services is an ongoing process, which benefits the national economy as a whole, giving a boost to tourism and commercial sectors. It also addresses the need of the large NRI population working overseas. Also, liberal exchange of traffic rights has helped in adding capacity on international routes for the benefit of the travelling public and also opening up commercial opportunities for Indian carriers,” Mr. Patel added.