People's Democracy

Reconsider Move On Private Domestic Airlines

The Communist Party of India (Marxist), the Communist Party of India, Forward Bloc and Revolutionary Socialist Party have issued the following statement on November 28, 2004.

THE government has announced plans for allowing private domestic airlines to expand their international operations to more destinations. At present, Indian private domestic airlines are allowed to operate international services to the SAARC countries.  The Left parties want the government to reconsider this move seriously before taking any decision. There are a number of reasons why such a proposal should not be proceeded with at present.

First, it is not wholly correct to say that there is spare capacity in the domestic sector and under capacity in the international sector.  The under capacity in the international segment has arisen due to the delay in the approval for the fleet renewal/acquisition plans of the two national carriers – Indian Airlines and Air India. 

One of the grounds which the proponents to grant international access to the private domestic airlines cite, is the need to compensate them for losses suffered.  What is overlooked is the fact that the private airlines’ losses have come about in a period that was particularly bad for airlines worldwide. 

It is ironic that IA’s losses are attributed solely to real/perceived inefficiencies, while these losses have arisen mainly due to large increases in essential input costs coupled with over capacity in a stagnant/recessionary domestic market, a creation of the private airlines with induction of capacity far in excess of market demand during the period 1998 to 2003.

Underutilisation of bilateral entitlements available to the Indian side is another reason cited for allowing private airlines to operate international services.  Such observations contain no reference to the fact that many of the international routes do not constitute any commercial opportunity and therefore will remain unutilised.   This is borne out by the fact that airlines of only around 50 countries, out of 100 or so countries with which reciprocal bilateral entitlements exist, operate to India against these entitlements.  As such unutilised entitlements do not need private airlines to participate. Both AI and IA who are already designated are willing and capable of utilising all entitlements that are commercially viable. All the government needs to do is to allow the national carriers to induct capacity by expediting their fleet renewal programmes to meet the long term capacity needs on international routes.

The Naresh Chandra committee has observed that the private domestic airlines are at a disadvantage vis-à-vis IA, as IA is the only “domestic” operator allowed to operate international services. It must be clarified that IA is not just a domestic carrier.  IA’s mandate from the time of IA’s inception in 1953 confers upon IA the status of an international airline. On the contrary, the private airlines were originally granted licenses to operate only scheduled domestic air services.  Their licenses have since been altered to allow them access to market that should logically be the preserve of the national carriers. 

Another argument put forth in favour of the proposal is that allowing more Indian carriers to operate international services will result in the development of tourism. It needs to be clarified that development of tourism does not need many airlines to operate against a country’s entitlements.  France, which attracts the largest number of tourists in the world (76 million in 2002) has just one international airline (Air France) that operates outside the EU. Most of the countries have designated only one or two airlines to operate on international routes.

These and many other arguments have to be considered.  Therefore, the Left parties request the government to immediately expedite the fleet acquisition/leasing arrangements for Air India and Indian Airlines so that our national carriers are strengthened and conditions created for providing a level-playing field to them. The proposal for allowing private domestic airlines operating to more foreign destinations may be considered only after this is done.