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The Indian Government allows private airlines to expand their operations on foreign routes. So far Air India has enjoyed the Right of First Refusal which allowed private airlines to operate any foreign route only when AI refused to operate on it.
In what is being seen as a major boost for Indian private airlines, the civil aviation ministry of India on Tuesday announced lifting the freeze on them to spread out their overseas networks.
The government of India had imposed the freeze on the Indian carriers in March last year with the aim of shielding the state-run airline, Air India from competition on foreign routes.
The government announcement has brought big cheer to the private operators who had been asking for permit to fly overseas routes, which were required to be first offered to Air India as per the previous policy.
With private Indian carriers now getting a green signal to expand abroad, the gap in the ability to offer seats between them and Air India will soon be bridged. As per reports, Air India currently offers 50 percent more seats than the private airlines in West Asia, apart from offering nearly 32 percent of some 25000 seats in S-E Asian sector, where private Indian airlines account for only 23 percent.
While explicating the new agreement on Tuesday, the Civil Aviation Ministry of India was reported as saying: “The Government had decided to allow Indian scheduled carriers, including Air India, to utilise the allocated bilateral till such time they reach the maximum permissible limit under Air Service Agreements (ASAs)”.
Online sources quote the ministry’s official as stating that under the new agreement, codeshare arrangements between Indian and foreign airlines will be encouraged; all steps will be taken for Indian airlines to transport ‘Sixth freedom’ traffic by promoting the development of the hub for them, thereby allowing them to attain a dominating position in the region.
The global aviation right called ‘Sixth freedom’ allow carriers to transport passengers or cargo from a second country to a third country by stopping in the one’s own country.
Will the Going Get Tough for Air India?
A popular choice of holiday makers booking flights to India, Air India serves many destinations including Asia, Australia, Europe and North America but has been under the red for some years now.
The launch of this new deal could put an adverse impact on Air India. The national carrier, that currently holds over 20 per cent market share of international air travel from India will now be facing strong competition from nimble-footed private carriers such as IngiGo, SpiceJet, etc.
Benefit for Travellers
For passengers this agreement can prove fruitful as with the increase in the number of operators on international routes, they will have a wider choice for flights departing India. Even foreign travellers will have a multiple options when they seek to book flights to India. Not just choice, with increased competition, they might as well be able to net cheap flight tickets.
The travellers will also benefit from opening of such destinations to the Indian carriers which were so far being served by foreign carriers. According to one online source, in Europe, 90 percent of the market share is left for the foreign carriers to cover because Indian airlines use less than 10 percent of the total allowed capacity.
While Air India, Jet Airways and Kingfisher operate flights to France and Germany, no one flies to destinations like Denmark, Norway, Spain, Sweden or Switzerland. For Asia-Pacific region the share of foreign carriers is estimated to be 55 percent, as per the online source.
Profitable Agreement for Domestic Carriers
This move will definitely give a remarkable boost to the Indian domestic carriers such as IndiGo and Spicejet who are eager to start more international flights.
For example, IndiGo, which serves flights to Bangkok, Dubai, Muscat, Kathmandu and Singapore, has applied for authorization to operate flights to Doha and Dammam as well several months ago.
Spicejet, a low-cost airline known for providing cheap flight tickets is also trying to seek the benefits of this new agreement. The airlines, presently serving flights to destinations like Colombo and Kathmandu is looking for permits to operate flights to Male and Dhaka. In addition, it seeks permission to fly to two destinations in the Commonwealth of Independent States including Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan, and Uzbekistan.