Easing norms: Will India extend Open Skies policy beyond Saarc nations?

New Delhi: The Ministry of Civil Aviation is finally at least thinking in bold terms, never mind if these thoughts eventually translate into some sort of policy action going forward or die a premature death at the discussion table itself. Minister A Gajapathi Raju today confirmed that there is some discussion within the ministry on extending the Open Skies policy beyond the Saarc region. Put simply, if the Open Skies policy is extended to other countries, it could mean easing of present restrictions on flights to and from other countries. [caption id=“attachment_1715337” align=“alignleft” width=“380”]  Union Civil Aviation Minister Ashok Gajapathi Raju. Image courtesy PIB[/caption] Will the ministry propose easier flying norms for carriers from Asean countries? Perhaps the Gulf region? No one is yet clear on what the proposal will be. But one thing is abundantly clear: the very fact that the ministry under a new secretary is even discussing a possible extension of Open Skies beyond Saarc is heartening. Specially since till a few weeks back, indications were that it will continue with restrictive stance on Indian airlines wanting to fly abroad, force our own airlines to mount flights to remote and regional areas by imposing a needlessly complicated Domestic Flying Credits formula and generally do everything else possible to stifle growth in the Indian aviation sector. Raju said on the sidelines of a Ficci event on tourism today that “Open Skies is good….we can allow Open Skies if our airlines promise increased connectivity to tier 2 and tier 3 cities”. His deputy, Minister of State for Civil Aviation Mahesh Sharma also said there is a proposal to open up Indian skies. A source in the know said Open Skies was one of the hottest debated topics in two marathon meetings the ministry officials have attended this month on preparing a draft Civil Aviation policy. But discussing Open Skies without a decision on removing the restrictive 5/20 provision, which bars Indian airlines from flying abroad without five years of domestic flying and 20 aircraft, makes little sense. As per the present policy, India signs bilateral air services agreements (ASAs) with other countries. These agreements specify where all carriers from a particular country land in India, how many seats they can offer each week and some other similar specifications. In 2005, India signed an open skies agreement with the US which meant unlimited seat quotas between the two countries. The 2005 agreement also provided for seamless code-sharing between Indian and US carriers. A similar arrangement seems to be in place for flights coming in from SAARC countries but its details are not available with us. Raju admitted today that Indian airlines are not using seats allowed under the existing bilateral ASAs with many countries. He also repeated his stance on the 5/20 rule: “it needs to go”. So will the ministry surprise everyone by simultaneously opening up Indian skies to foreign airlines and allowing Indian airlines free access to at least some international markets without any restrictions? This seems too optimistic, given the acrimonious debate over both these issues seen in the ministry meetings this month. According to sources, there were many reminders to all present about powerful, well-funded foreign airlines coming in the moment India opens its gates. Some of those present in the meetings also warned of Indian airlines dying if foreign airlines are allowed unlimited access to Indian passenger traffic. There were also fears about foreign airlines coming in to set shop in India and driving local carriers out of business if our skies open up. Kapil Kaul of global aviation consultancy CAPA says, “Thinking of open skies without removing 5/20 is not feasible and realistic. Need unconditional removal of 5/20 and without adding any further complexity like DFCs. How can we have a policy which promotes open access for foreign airlines and is closed for Indian carriers?” Kaul says he does not see ‘Open Skies’ moving beyond discussions and drafts. India has to liberalize (not open skies), “We first need a rule based and transparent bilateral framework after serious inter ministerial consultations. So, government must focus on developing a bilateral framework that works and is outcome based.” Has an Open Skies policy with the United Stated, now in place for a decade, lead to domination of the Indo-US routes by US carriers? Has a similar liberal stance for SAARC countries lead to Indian airlines being nudged out of lucrative routes? Will dismantling 5/20 actually urge airlines like Vistara (a joint venture between Tata Sons and Singapore Airlines) feed international hubs like SIngapore instead of benefitting local hub airports like the one in Delhi? These are some of the questions that need to be answered before a comprehensive Civil Aviation policy is drafted by the ministry. In the midst of all this, another related issue also needs pondering: Should the Indian government continue to put the blame on states for taxing Aviation Turbine Fuel to death, without itself looking at options to reduce the tax burden? In India, ATF – which accounts for anywhere between 35-45 percent of an airline’s operational costs – is significantly more expensive than in places like Dubai, Singapore etc.