Foreign carriers such as Singapore Airlines, Emirates and Lufthansa have benefited the most from traffic rights assigned to designated carriers as part of India’s bilateral air service agreements with various countries. In contrast, the utilisation of available traffic rights on international routes by Indian air carriers has dipped to nearly 24% from over 35% a few years back.
Last year, the falling share of Indian carriers on international routes had forced the Centre to consider reviewing such bilateral agreements. The Centre had, however, decided against such reviews.
Between 2004 and 2009, when the government had pitched for bilateral traffic rights, foreign airlines used half of available seat entitlements. In the year ending March 2009, these carriers together operated 3,20,052 seats per week to and from India, against 1,62,670 seats by Indian carriers.
During the economic downturn which started in 2008, many Indian carriers slashed flights to check losses as traffic plunged. Following this, Indian aviation authorities were reluctant to offer more seats for foreign carriers. Since 2009, the government has negotiated air traffic rights with just two countries: Qatar and Nepal.
?Before negotiations for more seats with foreign countries, the government asked Indian carriers to state their requirements. Based on that, agreements were concluded. If Indian carriers failed to operate those seats, what can the government do? An agreement with a sovereign country cannot be reversed,? said a government official. A civil aviation ministry official, however, said more seats have only benefited passengers, since it translated into lower tariffs. ?The liberalised regime spurred growth in the industry,? he said.
Industry watchers attribute the imbalance in capacity utilisation to India?s poor airport infrastructure and the airlines? lack of preparedness to operate adequate capacity on international routes. Indian airlines are yet to adopt the hub-and-spoke model followed by foreign carriers. Some analysts also attribute the odds against Indian carriers to the fact that bigger players cement their share of the market flying to smaller cities in Europe and India on cheap fares.
?Indian carriers were not prepared when the government allowed more access to foreign airlines. Middle East carriers, which needed more traffic to feed their onward flights, benefited the most from this,? said Ankur Bhatia, managing director, Amadeus India.
According to industry estimates, foreign carriers such as Lufthansa, Emirates and British Airways book nearly 30% of their passengers from India on their trans-Atlantic network, feeding their long-haul flights. India?s largest private airline Jet Airways has only now started using India as its hub to take passengers from countries like Sri Lanka and Bangladesh to Europe and the US. State-owned Air India has also announced its decision to make Delhi its hub for international operations.
?With low-cost airlines like SpiceJet and IndiGo set to start flights on overseas routes, the imbalance in capacity utilisation between foreign and Indian carriers would go down to some extent,? said an analyst.