Fewer bilaterals for Air India

Air India's misfortunes are being blamed on the government's generosity in allowing foreign airlines to operate lucrative routes, bilateral
agreements negotiated with other countries.
This, it is being argued, has denied traffic to the national carrier and India's other private airlines. Indeed, India's carriers have a very low share of the traffic into and out of India, as low as 10% on the hugely profitable Gulf routes.
But the problem is not in mismanagement of the bilaterals — air service agreement between two countries that regulates the flow traffic between them — but in the way capacity has been managed, particularly in the case of Air India. As pointed out by us repeatedly, it took Air-India over a decade to acquire new aircraft.
At one point the airline was operating with only about 30 airplanes and was in no position to service the bilaterals it was allotted. On the other hand, private airlines had to wait for five years before they could fly intentional destinations.
Lest these constraints reduce connectivity with the outside world, the government then allowed foreign airlines to operate a higher share of the bilaterals than it had negotiated with other countries. The mismanagement, therefore, is not so much about bilaterals as it is about the undermining of Air-India.
08/08/09 Economic Times

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Categories: Air India - International Aug 2009, Foreign Aug 2009, NACIL Aug 2009