AI refusal right hits private carriers? overseas expansion

The government?s unstated policy of shielding Air India from competition has held back overseas expansion programmes of domestic private carriers. This stance has led foreign carriers capture larger market share on various profitable routes that could otherwise have been shared between Indian carriers.

The civil aviation ministry has put in abeyance the applications of private carriers like Jet Airways and SpiceJet seeking permission to operate flights on sectors like Delhi-Paris, Kochi-Dubai, Mumbai-Riyadh and Delhi-Teheran.

Low-cost airlines IndiGo and SpiceJet are miffed over this stance as it indirectly gives government-owned Air India the right of first refusal whenever a case of granting traffic rights to private carriers for starting flights on international sectors come up.

Following the completion of five years of operation in the domestic market to become eligible to launch international flights budget carriers are planning to expand their networks beyond India.

?As per the ministry direction, we had sought permission to launch services on only those foreign sectors where Air India has no plans to operate. Accordingly we applied for CIS (Commonwealth of Independent States) countries, but the approval is yet to come,? a SpiceJet official said.

A civil aviation ministry official said that SpiceJet had applied to operate flights to countries like Iran, Iraq and Uzbekistan and a decision on this would be taken in due course of time.

The Delhi-based airline?s chief executive officer Neil Mills said that the company was planning to add flights on international routes in the coming winter schedule.

As per government data, Indian carriers hardly utilise traffic rights available for the CIS countries like Uzbekistan and Tajikistan. Designated airlines of these countries, however, use 20% of the traffic rights on the flights to India. Out of the total bilateral traffic rights Indian carriers utilise only 23% against 37% used by foreign carriers.

The civil aviation ministry had in June this year withdrawn permission to IndiGo to operate daily flights to Muscat and limited the services to four flights a week. It?s believed that the decision was taken after Air India gave their traffic requirements on India-Muscat sector.

?Most of the countries generally give priority to their national carriers while allocating traffic rights. So there is nothing wrong in India doing the same. The only thing is that the government should not hold the case of private airlines merely on Air India?s claim to operate flights on international sectors,? Amadeus India MD Ankur Bhatia said.

The government has not been very generous in granting private carriers permission to foreign sectors after public sector Air India in 2009 said that the liberal attitude of the aviation ministry towards foreign carriers had been one of the main reasons for deep hole in its finances. Recently, the airline sent a note to the ministry for withdrawing several ports of call granted to foreign carriers.

Following the government?s decision to open Indian skies and liberalise the domestic aviation sector for private players Air India has suffered heavily with rivals seizing its market share. For example, it has been cut to size by Emirates on lucrative India-Dubai sector. Similarly, Air India has lost its share to Singapore Airlines, Cathay Pacific, Lufthansa and British Airways.