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- Published 31.12.04
The grey clouds that covered the Indian skies are slowly parting. The clear and free blue sky is not completely visible yet but there is no doubt that the skies will soon be free of clouds. The government announced that private airlines would be allowed to fly to foreign destinations. Once the decision was taken to allow private airlines to fly in all domestic sectors, the next logical step was to open up the foreign air corridors to them. Private airlines have been flying the Indian skies for over ten years and at least some of them look to be robust enough to compete in international routes. This decision is to be welcomed for another reason. The two public sector airlines ? Air India and Indian Airlines ? have provided ample evidence that they are not in a position to fill all the slots available under the bilateral agreements that India has with other nations. The more significant implication of the decision concerns the customer. More Indian players in the international market and an open-sky policy will make travel easier and perhaps even cheaper. It can be expected that tourism will be the substantial gainer from the changed policy.
It should be noted that India has about one hundred bilateral aviation agreements. Airlines from about half of these fly in and out of India. India cannot match these because neither Indian Airlines nor Air India have enough planes to service all the countries whose planes fly into Indian airports. One crucial aspect of India?s changed aviation policy will have to concentrate on increasing capacity. One thing, though, is not clear from the announcements that have been made regarding the changed aviation policy. This concerns the Rs 250 crore that foreign airlines pay into India?s coffers as a kind of entry fee to use the capacity that exists under the bilaterals. Will India have to forego this revenue? Even though this fee affects, albeit slightly, the profitability of foreign airlines that come into India, but since most of the larger ones have excess capacity, they do not mind supplementing Air India?s capacity. If Mr Praful Patel, the minister for civil aviation, wants to give up this revenue, he will have to explain his reasons or suggest ways in which this revenue can be made up. For the changed aviation policy to succeed and be beneficial, it will have to be as transparent as the blue sky.