Of `Over Generous' airline deals

India's civil aviation ministry, has suddenly landed itself in the spotlight over what experts and politicians call “over-generous" aviation deals which threaten to take Indian passengers away from the country’s much touted aviation hubs - Delhi, Mumbai and Calcutta and turning India's airlines into ‘feeder services’ to rival hubs in Dubai, Abu-Dhabi and Southeast Asia.

In a letter written to the prime minister on Saturday, Dinesh Trivedi, former Minister of state and MP,  has warned " The creation of Emirate’s specific capacity entitlements, coupled with unbridled access to all major cities in India for the airlines of the UAE, has already resulted in Dubai establishing itself as the primary hub for Indian traffic ...Now, Abu Dhabi is also keen to emulate the success of Dubai and Emirates Airline, and is keen to establish Abu Dhabi as another hub airport on the back of Etihad Airways, and for this reason is aggressively seeking an increase in capacity entitlements."




Delhi - India's wannabe global hub

What sparked the protests was the Naresh Goyal led airline Jet Airways'
demand of the government  for an increase in air traffic rights between India and Abu Dhabi by three-folds to 41,000 seats a week from a current 13,000 seats a week and permission to operate  flights to the Emirate from 23 Indian cities. This happened even as it is working to finalise a stake sale deal with Abu Dhabi based Etihad.

India routinely holds bilateral talks with various countries to review its need to increase flights abroad. However, strangely, in the case of United Arab Emirates, a tiny Arab country hugging the mouth of the Persian Gulf, India has strangely held separate talks with each of the seven Emirates - Dubai, Sharjah, Abu Dhabi, Ras Al Khaimah etc., - which make up the nation of 7.9 million people. The separate bilateral talks with each emirate, which are nothing but single cities or clusters of villages, is akin to talking to each city or shire in Ireland!  

Analysts argue that Abu Dhabi is simply not big enough to justify 41,000 weekly or over 2 million annual flyers to that desert town and allege that if the ministry gives its nod to this demand, the Arab airport could well take India’s traffic on to North America, Europe, Africa and the Middle East and back as Dubai is doing.

Already, they point out, that thanks to  bad management of bilaterals by the Indian government, Emirates flew more international travellers in and out of India than any Indian airline 2011-12, according to official data.

While the Dubai based airline cornered 13 percent of the total market share of India, flying 4.5 million passengers in and out of the country in 2011-12, Air India and its subsidiary Air India Express jointly carried 4.1 million passengers or 12  percent. Indians make up a fifth of Dubai’s transit crowd.

Trivedi, who has been on the Parliamentary Committee on Civil Aviation for nearly a decade, alleges "already Emirates Airline is being called the “national airline” of India, as it operates more flights and carries more passengers to/from India than Air India, our national carrier. More than 70 per cent of the passengers carried by Emirates Airlines however travel to points beyond Dubai, on Emirates’ network." 

"Already, India is struggling to create a world class hub at Delhi, faced as it is with competition from airports like Dubai and Doha in the Gulf and Bangkok, Hong Kong and Singapore in South East Asia ... Allowing Abu Dhabi to come up as another hub which is only about three hours flight away from the major Indian metros will kill all aspirations that we may nurture as a nation, to establish a world class hub," points out Trivedi.

Experts say the establishment of hubs needs time and nurturing. It also requires home carriers with a critical size to be able to support the hub to blossom. Till now no global Indian carrier was flying out of Delhi as a hub. Air India has recently started doing that, but without sufficient critical number of flights to foreign destinations. Jet is more focussed on flying within the country and uses Brussels as a hub for flights to Europe and the US. Indigo and SpiceJet are still in their infancy as international carriers, thanks to a policy which does not allow Indian carriers to fly abroad till they have flown for 5 years within the country while allowing foreign carriers to fly into India from the day they are registered. 

That takes us to another question. What policies besides not giving away huge bilateral flight rights to privileged tiny nation states, can help Indian cities become global hubs?

India is a natural, hub for the region – not just South Asia but also much of Central Asia and South East Asia as they link up with each other. It simply needs to facilitate it. Flights connecting more East Asian and South East Asian cities, more of Europe and direct flights to US cities would help.

India is a natural regional hub

 

The rather ill-logical policy of not letting Indian carriers fly abroad till they have flown for five years here, should be scrapped. Since we anyway allow new start up foreign airlines to fly to India, one sees no reason why we should not let Indian entrepreneurs emulate Gulf Air or Air Asia’s model of focussing on the foreign market rather than on the domestic one. It will simply bring in more competition not only to the old dowdy state run carrier Air India but to newbies like Emirates, Etihad or Singapore Airlines which seem to be taking more air traffic out of India than our own airlines.

Relaxed and cheap transit visas would also be a great help. Travellers from Afghanistan, Bangladesh, Sri Lanka, Maldives, Myanmar, Iran, Central Asian republics who have valid travel visas and tickets to Australia, Japan, Europe (Shengen), UK and the US, should be given at least a three day transit visa in any Indian city. The move will surely funnel a lot of traffic through India and add to tourist spending.   

Usually these developed countries have a very rigorous visa regime, weeding out most undesirables, India can just cross check the names against any master roll of unwanted people that it has and issue transits on the spot. This is a policy which both Malaysia ad Singapore follows and profits from.

A policy of encouraging reasonably priced, neat and clean hotels near the airport and not just five star properties, besides shopping malls and hospitals in the area would certainly add to India’s potential as a hub.

However, to get all these things through, India as a nation and the Indian government as an organisation has to give up its muddled and often compartmentalised thinking on tourism and aviation issues and take a leaf out of its competitors books, in its bid to shine and win.

Postscript :
On Wednesday, April 24, India did sign the deal which Trivedi and others were protesting allowing  Abu Dhabi the rights to fly in and out 1.9 million out of India ... when the total number of airline passengers in and out the country is just 2.8 million ! : http://www.telegraphindia.com/1130426/jsp/business/story_16829390.jsp

Global hub dreams take a blow