India seeks 4 for each extra seat allowed to Dubai airlines
New Delhi: India has sought four seats for its carriers against every extra seat it allows Dubai-based airlines to operate to the country, according to people with knowledge of the matter.
The demand is said to be unprecedented as international aviation trade is typically a bilateral process, based on the reciprocal exchange of rights by states.
Under the bilateral air service agreement inked between the United Arab Emirates (UAE) and India in January 2014, airlines of both nations are allowed to operate a total of 66,000 seats per week between Dubai and 15 Indian cities.
Both Indian and the UAE airlines such as Emirates and Flydubai have exhausted this quota, leaving no scope for any increase in flights.
The UAE had asked the ministry of civil aviation to raise the number of seats for Dubai by another 50,000.
A senior official said the government wanted to create a more favourable position for Indian airlines on international routes.
"UAE-based airlines use these allocations for Sixth Freedom traffic to Europe and North America, which have higher ticket value. Indian airlines mostly stick to point-to-point service to Dubai," the official said. "Hence, there is a requirement for more parity in policy (to) favour Indian airlines."
The Sixth Freedom traffic refers to passengers an airline carries from one country to another via its airports. For instance, in FY19-20, 69% of Indian passengers flying to Europe and North America travelled through West Asian hubs such as Dubai, Abu Dhabi and Doha on foreign airlines.
Additionally, domestic carriers received no state funding even during the Covid crisis, whereas the UAE airlines are heavily supported by their governments, the person said.
The Narendra Modi government has taken a hard stance on giving more access to West Asian airlines in order to give Indian carriers such as Air India and IndiGo more of a level playing field on medium- and long-haul routes to Europe and North America.
Long-haul Flights
The move has been supported by Air India as the Tata group airline seeks to expand business on long-haul routes through wide body aircraft. Air India took delivery of its first Airbus A350 on December 23, as it embarks on an expansion and turnaround programme.
Air India and IndiGo have placed orders for over 1,000 aircraft, but only 70 of them are for wide-body planes capable of flying routes longer than seven hours.
"It's very difficult for us to fly an aircraft to North America if there's a surplus of capacity that allows people to travel out by some other airline, and so, too much just leaks out," said Campbell Wilson, chief executive, Air India, recently. "Incubate your local market, because that's fundamentally the most beneficial thing you can do for the economy."
Overseas airlines such as Emirates and Turkish Airlines have said such moves are protectionist and will hurt consumers. As much as "65% of international flights operated by Indian carriers come to Dubai. If you don't expand capacity, the losers will be the Indian citizens and the carriers will lose $800-900 million worth of income every year," Tim Clark, president, Emirates, told ET in June.
The government is also framing a national policy to transform its airports into major international hubs that will offer single-point international connectivity to the entire South Asian region. The policy, which will need cabinet approval, aims to frame laws for easing security and immigration bottlenecks at airports, besides allocation of international flying rights and building necessary infrastructure. The strategy is aimed at ensuring that airports such as New Delhi's can become transit hubs, competing with the likes of Dubai and Singapore's Changi Airport.
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