Cheers, IndiGo goes global

Posted online: 2011-06-17 02:58:36+05:30

After a self-imposed ban, India is finally allowing IndiGo Airlines, India’s leading low-cost carrier (LCC), to go abroad from September this year. Indigo completes five years of operation in the domestic sector, which is the main qualification to allow it to go overseas. Hopefully, other airlines will follow as soon as they qualify. The moot question is, what was the rationale and philosophy behind the ban? This ban, which has no legal bearing, is highly questionable, when India has not put a similar condition on carriers of foreign countries that come into the country.

Under the regime of Bilateral Air Services, all issues of commercial or scheduled aviation are supposed to be resolved between two countries based on agreements negotiated between them to their mutual advantage. These agreements determine the frequency of service, location of points of landing in each country and designation of air carrier companies. It is not left to the country to nominate its carrier. The nomination has to be acceptable to the host country too.

Under these circumstances, it is not clear on what basis India allowed LCCs of other countries to come to India and take away our business while Indian LCCs were not allowed to go to their country. Putting a restriction of five years of domestic operations for Indian carriers before they are allowed to go abroad while putting no such restriction on foreign carriers amounts to a restrictive policy against our own carriers and, therefore, denies our own carriers a level field. In the airline business, like in any business, it’s the early bird that takes the worm. India is one of the most attractive aviation markets. India’s outbound market is booming, with Indians’ increasing propensity to travel abroad having put the Indian travel trade in reverse gear. Where bringing foreign tourists into India used to be the most lucrative sector, the travel operatives are now working on sending Indians abroad on holidays. Indians are, however, cost conscious, especially when they travel on their own expense. Here, permitting foreign LCCs to get a foothold into the Indian market before Indian LCCs are allowed to go abroad amounts to cutting our own foot.

This issue becomes all the more intriguing when we see the utilisation of bilateral aviation rights already existing between India and various foreign countries. While foreign carriers use up all their rights on most of the popular routes, utilisation by Indian carriers remains well behind potential. Here, we have harmed ourselves; there is no foreign hand involved.

It is also a moot question as to who allowed this to happen and what were the circumstances. Giving our opponents a business advantage to the detriment of our own industry needs to be investigated. Like spectrum in the telecommunications sector, international routes are also sovereign property and have value attached to them. In this case, two countries are involved in each route and negotiations have to ensure that both countries benefit equally. But by not utilising our rights, we are giving undue advantage to our competitors and not providing a level playing field to our own industry. This becomes all the more relevant in the face of the anti-corruption agitation going on in India today. From questionable pilot licensing to indiscriminate distribution of bilateral rights that undermine home advantage, there is much that merits a serious inquiry in the aviation sector also. Is anyone listening?

The author is chairman of the International Foundation for Aviation, Aerospace and Development (India Chapter)