Foreign airlines welcome to India

Indians are now among the world's biggest travellers but this has hardly helped our home-grown airlines, thanks to the government's lop-sided policy that appears to favour foreign airlines over desi ones. As a result, in region after region, the lion's share of seats are taken up by foreign carriers while the Indian carriers are left with a fraction.

The reason for this pro-foreign bias is a cabinet decision to allow only those Indian carriers to fly abroad that have an experience of flying for five years and has a fleet of at least 20 aircraft. However, foreign carriers can fly into India even if they are start-ups and have just one or two aircraft. Check this out. Mihin Lanka is a two-year-old Lankan airline with just one plane, and it flies into Varanasi, Gaya and Tiruchirapalli. RAK Airways is another two-year airline from UAE with two planes. It flies to Delhi, Mumbai and Chennai. Bangladesh's United Airways, is two years old, has three planes, and flies to Kolkata. There are several such examples.

In contrast, Spicejet started in 2005 and has 19 aircraft but can't fly abroad. Nor can Indigo which started in 2006, has a fleet of 22, and holds the best on-time record among Indian aviation companies. It's the same story for Paramount and Go, both four-year old airlines. Never mind that they fly longer routes within India than many overseas routes -- the Delhi to Trivandrum route, for instance, is longer than Mumbai to Dubai -- but they can't still fly overseas.

The net result: the seat entitlement of foreign airlines has gone up from 22.8 to 77.5 million seats per annum from January 2004 to December 2008 -- an increase of 239.5%. The beneficiaries of this largesse include little-known new airlines like Air Arabia, Tiger Airways, Jazeera and Air Asia. As a matter of fact, nearly two-thirds of the international traffic in and out of India has been cornered by foreign airlines. Only three Indian companies can fly overseas routes -- Air India, Jet Airways and Kingfisher. The other airlines have spare seats because there is overcapacity in the domestic market. So they would, if they could, deploy their spare planes on lucrative routes to Gulf or Southeast Asia.

Foreign airlines, especially from the Gulf and Southeast Asia, have now deployed single aisle planes to fly out of a large number of Indian cities. Air Arabia, for instance, flies from 13 Indian cities to Sharjah. These passengers reach hubs like Dubai, Doha, Qatar, Kuala Lumpur and Singapore in time to fill up the wide-bodies of home airlines that go to all parts of the globe, including far away Rio and Buenos Aires. So profitable is the Indian market for foreign airlines that a Gulf airlines applied for permission to fly into five cities, including three metros, even before starting operation! "Some foreign new airlines' first flight is into India while we have the five-year, 20-aircraft restriction. In a free market, this rule is illogical and hurts our own companies," says Paramount Airways MD M Thiagarajan.

The founder of low cost flying in India, Captain G Gopinath, said rules should be such that they allow entrepreneurs to come in and break the old order. "Putting restriction like these will mean established players will continue to enjoy their monopoly and stagnate growth. Newcomers with ideas and innovations must be given a chance," Gopinath said. The aviation ministry in UPA-I had proposed to change the rule and allow airline to fly abroad on a "case-to-case" basis. The matter was then referred to a group of ministers. But then attention strayed from this as Air India's battle for survival came on the sarkari front-burner. The ministry is getting flak as AI's poor health is being partially attributed to the huge grant of bilaterals under which foreign airlines have flooded India.

The Indian aviation industry is obviously worried. The three Indian carriers that fly overseas -- Air India, Jet and Kingfisher -- are in varying degrees of financial trouble. And by the time other airlines start meeting the norm to fly abroad next year, it's feared that foreign airlines would have strengthened their grip on the Indian market through the twin means of low pricing and connectivity to rest of world from their hubs. In the past one year, though, hardly any new bilateral has been given. "India is very strategically located between the west and the east. The one reason our airlines' share in international traffic did not go up was due to lack of hub airports. Our airlines can take passengers from here to a few points in Europe, US, Gulf and southeast Asia but not provide connectivity from there to passengers like an Emirates, Qatar, Singapore Airlines, Cathay Pacific, Lufthansa or Air France-KLM combine," said a senior aviation ministry official. He said that once "hubs get ready, we would need a strategy wherein as many Indian carriers can get passengers from nearby areas to these hubs from where the big Indian carriers will take them to all parts of the world." But Indian airline operators fear that by then the stranglehold of foreign carriers over the Indian market will become virtually unshakeable. "You need to act right now,” said one of them who did not want to be identified.