By now much water has flown under the bridge over the move of the Ministry of Civil Aviation to grant more flying rights and seats to Abu Dhabi. Almost all the stakeholders - airport operators at Delhi and Mumbai, airlines like Air India and other private carriers and even some ministries - have put up strong resistance to any such move. Now, the opposition gets more teeth with some members of Parliament slamming any plan to increase rights to Abu Dhabi by a large margin.
Jet Airways, which is in talks with Abu Dhabi's Etihad Airways for selling 24 percent stake, has sought to connect 23 Indian cities with Abu Dhabi in the long and medium terms, requiring over 41,000 seats per week over the next three years. The current bilateral agreement with Abu Dhabi allows Indian carriers to operate merely 13,300 seats each week. Jet has requested that the existing capacity entitlements of Indian carriers under the bilateral agreement be expanded by over 40,000 seats and urged the government to expand the India-Abu Dhabi bilaterals by almost 54,000 seats each week.
This gargantuan increase in traffic rights is what is raising everyone's hackles. At a meeting of the Parliamentary Standing Committee on Tourism, Transport and Culture on Thursday (this committee is headed by Sitaram Yechury) MPs from various political parties voiced their concern over Abu Dhabi getting increased access to India through its proposed equity participation with Jet Airways. Not just satisfied with voicing concern at the meeting, one member - Trinamool Congress MP Dinesh Trivedi - today shot off a letter to the prime minister. Trivedi has sought immediate intervention by the PM to suspend talks of increasing bilateral flying rights between India and Abu Dhabi (which are scheduled for early next week).
"If the Government is however constrained to hold the planned civil aviation consultations with Abu Dhabi, we should offer them only a token increase in capacity entitlements". Trivedi expressed wonder at the "special" status which has been accorded to the UAE by India since we have exchanged access and capacity with each emirate of the UAE "Dubai, Sharjah, Abu Dhabi and Ras Al Khamiah" separately.
As Firstpost pointed out in an article on Thursday , Trivedi has also said creation of emirate-specific capacity entitlements "coupled with unbridled access to all major cities in India for the airlines of the UAE has already resulted in Dubai establishing itself as the primary hub for Indian traffic and Emirates being called the national airline of India as it operates more flights and carries more passengers to/from India than Air India.”
So what is wrong with this? Many people have asked since this issue erupted earlier in the week. Well, several things actually:
1) As Trivedi points out in his letter, what is the point of pumping an unprecedented Rs 30,000 crore into Air India to keep it running if the airline will be left with virtually no traffic to carry out its international operations? "I smell a rat. This demand (of tripling seats to Abu Dhabi) is totally illogical. Its like cutting the branch you are sitting on," Trivedi told Firstpost. He hinted at a conspiracy to kill Air India. If Abu Dhabi and not Delhi is to become the hub for Indians wanting to fly abroad, why give such an expensive life line to Air India from taxpayers' money? After massive flying rights given to Emirates, the enhancement to Jet-Etihad — if granted — would mean AI's nonstop flights to US will soon turn unviable and it would be forced to shut them down. Air India is the only one to be affected on long haul routes as it is the only Indian carrier, apart from Jet, that flies to Europe and North America.
2) As we argued earlier, if the government agrees to triple the seat entitlements for Abu Dhabi, what stops it from doing the same to Dubai, whose national carrier Emirates has been seeking a 100% increase in seats for months now? Has the CAG report been forgotten then? Previous Civil Aviation Minister Praful Patel had come under unprecedented criticism for the audacious manner in which flying rights were handed to foreign carriers during his time, particularly in the case of Emirates. In a 2011 report, the CAG pointed out that between 2005 and 2010, Dubai's bilateral entitlements grew from 10,400 seats to 54,000 seats per week! It also pointed out that Emirates was able to derive substantially greater traffic under the Dubai bilateral due to 6th freedom traffic, which means passengers flying between two countries while stopping in one's own country. All this while, Indian carriers were essentially carrying only 3rd or 4th freedom traffic between India and Dubai.
Will it take another CAG audit to drill some sense into the present civil aviation mandarins? If we wait for CAG, it may anyway be too late to prevent the disaster which is already unfolding for Air India.
3) Not just Air India, creation and sustenance of the airport infrastructure in India will definitely be hit if Abu Dhabi becomes the hub for Indian passengers. Delhi and Mumbai airports have seen multi milllion dollar investments with the intent of making them gateways for Indians as well as for other nationals from neighbouring countries to pass through. The concept of hub traffic is essential to the survival of aviation infrastructure in India. If bulk of international traffic is to transit through Abu Dhabi, we may as well dismantle the swanky T3 at Delhi International Airport
A story in the Times of India this morning talks of Jet seeking this quantum jump in seat entitlements to Abu Dhabi so that it may connect smaller towns and cities in India to numerous points in the US, Gulf, East Africa and Europe - but all via Abu Dhabi. This story also says Jet, which has 100 aircraft in its fleet now, plans to place a massive order for Boeing 737 Max and 777s shortly.
For an airline which had to offer two million seats at huge discounts to get working capital cash (earlier this year), this is certainly a huge leap.