INSIDE INDIAN AVIATION'S HIGH-STAKES BATTLE

Between FY19 and FY23, Indian carriers have gained more share of international traffic

- Anu Sharma & Mihir Mishra

By 2014, a controversy around bilateral foreign flying rights—air service agreements between two countries—was simmering in India. A few years earlier, the Comptroller and Auditor General (CAG) had, in a report, questioned the liberal award of such rights by the ministry of civil aviation to many countries, especially those in the Middle East. This impacted Air India, then India’s state carrier, the CAG report pointed out. The struggling airline was living on taxpayers’ money. In 2012, the government approved a bailout package that totalled ₹30,231 crore.

In an ideal world, bilateral rights are supposed to help airlines from both sides. It allows airlines from respective countries to operate flights within a quota. For instance, India and Dubai have a bilateral agreement that allows airlines from each side to operate flights totalling 66,000 seats per week.

Why did it put Air India at a disadvantage? Travellers don’t just fly from country A to country B. They may need a connecting flight to a third country. International carriers operate through large hubs in their home countries and simply take passenger traffic originating in India away, beyond their home bases. In aviation parlance, it is known as ‘sixth freedom traffic’.

The Bharatiya Janata Party-led National Democratic Alliance began to deliberate on the rights soon after winning the general elections in 2014. Narendra Modi was yet to be sworn in as the Prime Minister. One day in May 2014, at the Gujarat Bhawan in New Delhi, he wanted to be briefed on key political issues. The award of foreign flying rights came up in one of the presentations made.

“It was clear from those initial discussions that the policy on bilaterals will get stringent, going ahead. It would not be as liberal as earlier," said a person involved in those discussions during the time. He did not want to be identified.