In a reversal from an earlier policy, which gave state-owned Air India preference over bilateral aviation agreements for international routes, the Indian government will now open access to private airlines. “Increasing traffic rights can help private carriers eliminate some of their financial problems as international routes are more profitable,” said Indian civil aviation minister Ajit Singh, announcing the policy U-turn at the India Aviation show in Hyderabad on March 14. Privately owned airlines will get between 500 and 600 new international flights this year, raising Indian carriers’ overall share of international routes in and out of India from the present 30 percent to 40 percent.
“This share will be gradually increased in coming years,” added Singh. India is granting rights for routes to many countries, including Egypt, Uzbekistan, Vietnam, Tanzania and Ethiopia. On average, the policy change amounts to 80 flights a week for each of the airlines concerned, namely Jet Airways, Kingfisher Airlines and budget operators IndiGo and SpiceJet. It remains unclear the extent to which the budget carriers will benefit from the reform, given their narrowbody types have only five hours of flying endurance—insufficient for most of the routes concerned.
“This is a positive step. Hopefully there will be some lucrative routes such as Abu Dhabi, Hong Kong, China and CIS countries,” commented an official of one of the budget airlines, speaking on condition of anonymity. Jet Airways appears likely to become the main beneficiary, given its long-haul fleet.
Cash-strapped Kingfisher, with its reduced fleet, might find itself unable to exploit the new traffic rights, having just had to withdraw existing service to London after the lessor of its Airbus A330-200 reclaimed the airplane due to the airline's failure to make lease payments. “We would like to confirm that we are curtailing our widebody overseas operations that are bleeding heavily,” said Kingfisher in a statement.
Singh also confirmed that the government is prepared to bail out Air India alone, since it operates as a government concern. “Even this is not going to continue indefinitely,” he insisted. “The public exchequer can't bear bailing out Air India unless it improves efficiency and cost structure in line with the aviation industry.”
Separately, Boeing has denied reports from India’s civil aviation ministry that it has agreed to pay approximately $500 million in compensation to Air India for delays in the delivery of 27 Boeing 787s the airline has on order.
