No more seats to rivals; low-cost domestic flights

New Delhi : The civil aviation ministry has drawn up a plan for revamp of Air India, which proposes a ban on grant of new bilateral rights to international carriers, whose liberal distribution in recent years has come to be seen as a reason for the national carrier’s woes.
The proposals include flying Air India Express, the low-cost service, on domestic routes, the mother ship doing away with loss-making flights, and a revamp of its board of directors. The total bailout package may exceed the estimates of Rs 4,000 crore floating in the air.
On routes in countries in West Asia or those such as China, the civil aviation ministry grants seats to carriers based on agreed bilateral rights with each of those countries.
Civil Aviation Minister Praful Patel, who held this portfolio in the first government of the United Progressive Alliance, too, has so far followed a liberal open-sky policy, sharply increasing the number of seats offered to West Asian airlines on flights connecting India. According to internal figures available with airlines, the total number of seats offered to West Asian carriers rose from 2.5 million in 2004 to 7.5 million last year.
Emirates, one of the largest West Asian airlines and the third largest connecting India (after Air India and Jet Airways) got to increase its India-related capacity four times from 12,400 seats a week in 2004 to 48,000 seats a week in 2008. In the same period, seats on Etihad Airways’ India-related flights rose from 1,600 seats a week to 8,500.
This created a pocket of turbulence for Air India, which used to earn its bread and butter, and bacon and eggs, mainly from the West Asian sector. The airline now has only 23.55 per cent of the total seats on international flights connecting India, according to CAPA. West Asian carriers have 26.7 per cent.
The government has directed SBI Caps to prepare a restructuring plan, to be submitted by the first week of next month.
10/07/09 Mihir Mishra & Surajeet Das Gupta/Business Standard

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Categories: Foreign Jul 2009, Low Cost General Jul 2009