By The aviation sector is facing a surge of tensions over Air India’s plans to transform into a global airline with hundreds of new jets. Foreign carriers are calling for increased access to India’s economy, the world’s fastest-growing economy, with a growing demand for the government to ease a near-freeze on capacity deployment on many routes. The sale of India’s flag carrier to the Tata conglomerate has heightened the debate over market access. The Indian government faces demands from Dubai’s Emirates, Turkish Airlines, and Kuwaiti carrier Jazeera Airways, among others, for a sharp increase in traffic rights to and from India. Vietnam and Indonesia also want more flights.
Currently, most Indians use foreign carriers for long trips, often changing at Gulf hubs, and there are relatively few long-range jets based in the country despite a population of 1.3 billion. India’s civil aviation minister has urged Indian airlines to order more big jets to meet demand without forcing passengers to change planes. The minister also stated that the government is not currently looking to ease curbs on traffic rights.
Analysts suggest that India’s government is not in a hurry to relax curbs as it seeks to recapture traffic lost to foreign carriers as part of a wider initiative to create an economic powerhouse. There is clear evidence that the government wants a mega-carrier of size, scale, and quality to emerge over the years, according to the head of CAPA India consultancy. India’s refusal to allow more flights for now appears to be tactical.
Emirates President Tim Clark welcomed the launches of Air India’s rebirth and the new Saudi carrier with dozens of jet orders, saying there was enough room for everyone without traffic curbs. Analysts note that India is not alone in using a post-war system of air traffic agreements to aid development, and other countries have similar systems in place.
Some analysts also suggest that India is not encouraging discussion on the matter and that the government’s position, whether other airlines like it or not, is that it wants to build a bigger brand and have a bigger share. One exception is India’s granting of more flights to Russia.
It is unlikely that the government will take risks on traffic rights ahead of an election year next year, according to the founder of air analysis website NetworkThoughts.