Sunday, June 10, 2018

Seat-share rules set off a war in the skies

New Delhi: The Indian aviation industry is divided over the tweaking of Route Dispersal Guidelines (RDGs), which make it mandatory for airlines to fly between non-profitable, unserved and underserved routes. The proposed guideline change would allow airlines to trade seats between themselves, thereby making it easier for them to comply.

The aviation proposal is similar to the Reserve Bank of India norm that lets banks buy priority sector lending from each other. The RBI norm helps banks meet the condition of minimum 40 per cent lending to the priority sector, such as agriculture and small enterprises.

Documents reviewed by Business Standard show that Tata-owned airlines Vistara and AirAsia India, as well as SpiceJet have supported the move, while IndiGo, GoAir and Jet Airways have opposed it, saying such trading will dilute the objective of increasing connectivity in unpenetrated regions. The debate has also triggered questions over the viability of RDGs at a time the government is operating an incentive-based Regional Connectivity Scheme with a similar purpose of increasing air connectivity to hinterlands.

“Today there is no need or gain of trading seats under RDGs. Only a few airlines are proposing these rules due to their lack of interest in deploying capacity in CAT II and CT II-A routes,” says a submission of Jet Airways.
10/07/18 Arindam Majumder/Business Standard