Government’s protectionist move divides airline industry, BA News, BA

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India’s policy to freeze flying rights to Middle Eastern countries has divided the aviation industry, with Air India CEO Campbell Wilson calling for restrictions on market access for foreign airlines.

However, Wilson’s call for more protectionism has not found support among other Indian airlines such as IndiGo and newcomers Akasa, which are looking to launch new flights to the Middle East.

Liberalization of bilateral rights is likely to emerge as a flashpoint in India’s civil aviation sector if a new government takes charge, experts say.

Wilson said Air India is investing in ordering aircraft, and opening the Indian market to foreign airlines will jeopardize its investments.

“Indian airlines have recently ordered more than 1,000 aircraft. We are hungry for more. We commit to that on the basis that there would be an economic return on that investment, which, when you add it all up, is well over $100 billion. If the rug is pulled out from under us, and if we can’t fly those planes, we won’t take those planes,” he said.

Wilson’s comments came days after Emirates President Tim Clark said the Indian government’s decision to restrict foreign airlines will leave Indian airline passengers with fewer choices on international routes.

“I can tell you it won’t work in the long run. It will be detrimental to India’s own economy,” Clark said in response to a question from ET.

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The UAE has requested an additional 50,000 seats per week from India. The last increase in flying rights to Dubai took place in 2014, allowing Emirates to operate 66,284 seats on India routes. However, since then, traffic between India and Dubai has increased exponentially and airlines are unable to add more flights as they have exhausted their quota. Travel data analytics firm OAG said Delhi-Dubai is one of the busiest routes in the world.

Wilson said Middle Eastern airlines such as Emirates only take traffic from India and transfer 80 to 90 percent of it to other parts of the world.

“They are feeding their own economy and their own center, not India’s. So when we talk about the liberalization of bilateral rights, we have to talk about who opens up what to whom,” he said.

But for a new airline like Akasa, there is room to add flights on a lucrative route like Dubai.

“Our government is smart enough to figure out what needs to be done to protect India’s future in a way that doesn’t saddle Indians with higher tariffs. If we don’t open Dubai in the next year, the rates will increase exponentially,” Vinay Dube, CEO of Akasa, told ET.

Indian airports are also wary of restricting foreign airlines as they have undertaken massive expansion projects and now fear that capacity may not be utilised.

“Airports like Hyderabad and Bengaluru have invested in major capitals and expanded their terminals. Indian airlines, with the exception of Air India, are not yet ready to launch more international flights. The government should look at granting ad-hoc bilateral rights to foreign airlines until such time as Indian airlines are ready. Otherwise, the additional capacity will remain unused, leading to loss of revenue,” said a director of a private airport.

  • Published on Jun 8, 2024 5:36 PM IST

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