Thursday, August 17, 2017

Aviation woes are not just about Air India

Volume 2 of Economic Survey 2016-17 highlights aspects which show that divestment of Air India is only one of the many problems that the aviation sector is trying to deal with. It talks about reforms such as privatisation/disinvestment of Air India, creation of aviation hubs and reconsidering the 0/20 rule as ways to improve Indian airlines’ share in the international market. (The 0/20 rule says that any airline that sets aside 20 per cent of its fleet or has 20 aircraft can fly on international routes.) All these are valid points.

There is a reason why foreign airlines have been able to walk away with a lion’s share of Indians travelling abroad. In the 1980s, the Government allowed only Air India and a few foreign airlines to operate to a restricted number of airports. In time, more airports were opened which allowed foreign airlines to operate to more parts of the country. But successive governments took decisions which did nothing to help Indian carriers get a share of the international market.

For example, in 2003 the Government announced an open sky policy with Asean countries (which includes Singapore, Thailand, Malaysia — favourite destinations among Indians), Myanmar and Indonesia, and Saarc countries which allowed Sri Lanka’s national airline, Sri Lankan, to ramp up its flights to India to over 100 a week from under 45 earlier. The open sky agreements allowed carriers of Asean and Saarc to operate an unlimited number of flights to 18 tourist destinations and a daily service to the four metro cities.

Less than two years later, India and the US signed a landmark agreement permitting any number of airlines to operate any number of flights to any point in each other’s territory. Bilaterals were signed with various other countries, chief among which were Dubai which saw the weekly seats that were allowed to each side go up to 54,200 from 23,000.
17/08/17 Ashwini Phadnis/Business Line