Indian government considers reviewing bilateral air services agreements, airlines cautiously optimistic

Representative image of a Singapore Airlines Airbus A380 (Image: Reuters/Kai Pfaffenbach)

Representative image of a Singapore Airlines Airbus A380 (Image: Reuters/Kai Pfaffenbach)

The government is considering reviewing bilateral air services agreements, or ASAs, that India has signed with various countries, a move that has been welcomed by global airline executives while raising a degree of concern.

Globally, airlines are allowed to fly only after countries exchange ASAs with each other.  These agreements can specify the number of seats per week in each direction or the number of flights per week in each direction and also the cities to which a designated airline can fly.

Depending on the demand and individual needs of each side, the carrying capacity to each city can be defined.

Airlines in India can request the Ministry of Civil Aviation (MoCA) to increase flights to a particular country. MoCA sends the request to the Ministry of External Affairs (MEA), which forwards it to the Indian mission in the country to which the airlines want to operate more flights.

If foreign airlines want to operate more flights to India, they approach the Indian mission in their country. The Indian mission sends the request to the MEA, which forwards it to the MoCA. The MoCA then reaches out to the Indian airlines to gauge their own interest in increasing flights to that country.

In the last couple of years, India has hardly exchanged any fresh ASAs. Yet, the Indian government is keen to revise some ASAs which it believes are heavily skewed in favour of airlines from some other countries. Some experts say that only 36 percent of international air traffic to India goes to Indian airlines and over 60 percent of the revenue generated on these routes goes to foreign airlines.

It is in this backdrop that the Indian government is now looking at reviewing the bilaterals, a decision that has generally been welcomed by the global airline industry.

Rohit Ramachandran, chief executive officer of Kuwaiti airline Jazeera Airways, says he supports the Indian government’s move. “It is long overdue. Kuwait is probably the last country in the Gulf Cooperation Council (GCC) which has not had its bilaterals since 2007,” he said, adding that the allocated seat capacity of 12,000 seats on each side has been “maxed out.”

Since 2007, the Indian community in Kuwait has more than doubled to close to one million now, Ramachandran said. “It makes perfect sense to increase the bilaterals in a logical manner by which I mean in line with the population growth of the Indian community in Kuwait. So whether it is Indian nurses or teachers or middle-income engineers it makes sense for them to fly direct to their home country rather than fly through other points in the Gulf,” he said.

Singapore Airlines CEO Goh Choon Phong said he hopes the discussions will take place. “We look at all opportunities that we can start to serve India again,” he said.

Many others are looking at more clarity on what the government means by reviewing the bilaterals.

Allan Joyce, CEO of the Australian airline Qantas, said: “You cannot go backwards in bilaterals. You cannot make them more restrictive. You can make them more open. If you make them more open that creates opportunities.”

He added: “When bilaterals are reviewed, they are usually to open up a bit more. If Qantas had the ability to fly to India and then onwards which we have in Singapore and Bangkok that would be something which would be of real interest to us. That would give us other options.”

Joyce is clear that Qantas is not looking to restart its route to India in the near future. “The problem for us has always been that Indian traffic has been very disbursed. When we flew into Mumbai, it was only one location. We found that it was better to fly into Singapore and at that time we had a relationship with Jet Airways that flew to multiple locations in India. We continue to look for different partners in India. But as the market grows we will eventually have a direct service,” he added.

According to Tim Clark, president of Emirates, revising the bilaterals is one thing but “revising the bilaterals adversely is another. I do hope that the Indian government continues to grow its bilateral arrangements with countries that are bringing real value to India,” he added.

Willie Walsh, director general of the International Air Transport Association, maintained that bilaterals are a commercial issue between countries and between airlines. If the ASAs are revised, the process has to be based on mutual agreement.

“If India unilaterally walks away from it (ASA), then it is a completely different issue. But I am not suspecting that India is just going to walk away,” Walsh said.

(Ashwini Phadnis was in Boston at the invitation of the IATA)