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Fri 26 Aug 2016 12:26 AM

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India's air traffic controller must come back to Earth

The country has more to gain from increased air traffic rights with the Gulf than it realises, says Courtney Trenwith

India's air traffic controller must come back to Earth

Finally, India is apparently ready to open talks with Gulf states over increased air traffic rights.

For decades the sub-continent has been staunchly tight on releasing new seat capacity to foreign airlines, which in turn restricts its own carriers and, thus, its citizens, both travellers and businessmen.

But more than restricting passengers — which also pushes up prices — keeping a lid on aviation is hindering India’s economy.

Yet as he reportedly revealed last week that he was willing to open up bilateral discussions over air traffic rights, Civil Aviation Minister Ashok Gajapathi Raju claimed there had been “no mutual benefit” in past negotiations.

How so, minister?

A report commissioned last year by Emirates Airline to prove that its calls for tens of thousands more seats between Dubai and India made economic sense, found that the airline had contributed $848m annually to India’s gross domestic product (GDP) and supported over 86,000 jobs.

An Emirates executive, Adnan Kazim, said the airline was confident that increased capacity would allow it to “contribute even more to India’s economic growth and development by opening new conduits for trade and investment”, referring to Emirates’ ability to connect Indian cities to more than 140 others.

Independently, Dr Saurabh Bandyopadhyay, from the National Council of Applied Economic Research (NCAER) in New Delhi, which carried out the study, said it showed “further escalation of economic benefits for the Indian economy” if Emirates was allowed to increase its seat capacity. Similar estimates could be replicated for other Gulf cities.

Etihad Airways also has proven the benefits of opening up India’s aviation industry. It says annual passenger traffic between Abu Dhabi and India increased 63 percent last year on the back of its $379m purchase of a 24 percent stake in Jet Airways.

Still, Indian opponents argue that allowing the powerful Gulf airlines greater seat capacity will damage local carriers. Even as Minister Raju reportedly said he was willing to open up bilateral discussions over air traffic rights, he warned that he would be taking a tough stance.

“As the aviation minister, my job is to secure our national interests and not someone else’s,” he was quoted as saying.

So scared is the government that its carriers will be smothered by foreigners, last year it proposed auctioning new seat capacity rather than negotiating it at a state level — a move that would make flying to the country more expensive. The International Air Transport Association (IATA) expressed concern that it would only push up prices, and the idea was later dropped.

It is also hoping that its move to allow 100 percent foreign ownership of a domestic carrier will force international airlines to invest into its carriers rather than increase their own seat capacity.

Indians themselves badly want more connectivity with the Gulf, a region where millions of them work to support their families back home, where jobs — or decent salaries — are often scarce.

In February, more than 2,000 people signed a petition calling for a direct flight between Dubai and Coimbatore, a city of 2.1 million in Tamil Nadu. The airlines have been unable to consider the route due to a lack of air traffic rights (although AirAsia does provide five flights a week from Sharjah).

But by opening up the market, more people will fly, providing greater, not less, opportunity for Indian airlines, both full service and low cost.

Still, there is some truth in the fact that Gulf airlines will likely dominate the market, purely because India’s own airlines are struggling. Airline debt is now equivalent to more than 100 percent of airline revenue, with a total of about $11.3bn by June 2015, according to consultancy CAPA. The centre has previously said that an additional 120,000-150,000 weekly seats would be needed to serve demand between India and the Gulf within the next three-five years.

But for India to reach its potential as a leading aviation market, the onus is not on airlines but the government, which must establish “a clear vision for the sector, supported by an enabling policy and regulatory framework”. For all its grandiose claims about reforming India’s economy, the Narendra Modi government has a long way to go in the aviation sector, potentially one of its greatest economic drivers.

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Raj 3 years ago

A flight from Dubai to Coimbatore is desperately required. Thousands of people travel from Coimbatore to Dubai either getting off at Dubai or using it as a transit to Europe and America.
Emirates transports huge amounts of cargo from Coimbatore to Kochi just to be flown to Dubai and elsewhere in the world.
Emirates and Fly Dubai should immediately commence flights to Coimbatore. The latter was all set to commence flights to Coimbatore and then was denied permission two weeks before commencement.
The government of UAE should take up these matters with the India government.

Shanti 3 years ago

All gulf carriers want Indian sector and more seats. But the price is always comparatively on the higher side than longer destinations. Gulf carriers have understood that it is the money making sector, but have no respect for the Indian travelers from the crew when you board and are abused always. Wish that partiality is withdrawn from the minds. Also Bhubaneshwar in the East Indian state of Orissa is much needed. There are lot of travelers who always have to hop in multiple airlines / aeroplanes with stop over. Wish they start for the untouched sectors instead of the repeated ones.

Prabhakar 3 years ago

I think journalists like you should first educate themselves on the subject. You have made several sweeping statements without any knowledge of the facts. Please do some research about India-Abu Dhabi bilaterals which happened in 2013, and Dubai was given additional 10K seats in the same year. All your statistics related to GDP contribution can be quashed in a minute.

Suresh 3 years ago

I wish the author had given some other statistics , For example :
1) How many millions of dollars of business Emirates has taken away from Indian carriers by picking up Indian passengers for Europe and America , even when Indian carriers are NOT allowed to pick up passengers from Dubai for onward journeys to Europe and America.

2) Emirates has landing rights , I believe , in 15 cities in India, where as Indian carriers get to land in only one city in return. I really would like to know if the TOTAL capacity allowed to Emirates by India is in any way comparable to the total capacity allowed to Indian airlines.

3) Why does Emirates not allow seasonal increase in capacity to Indian carriers during peak seasons like the summer holidays, and festivals like Diwali, Christmas etc.

4) Why not calculate the total contribution to Dubai's economy buy 50% of its population who are Indians. On that count alone Indian carriers' capacity should be more than doubled !!

Shailesh 3 years ago

You are right, the writer must be a young writer who was given a already prepared report to publish. Indians have been complaining of high fares for the last 10 years and all airlines especially the gulf regional airlines have milked them. Its high time, the prices come back to realistic levels.