Etihad fallout: Now two other Gulf giants want govt to up seats

New Delhi: The writing was always there on the wall but Ajit Singh and company chose not to read it. Now, the knives are out in the open. After Singh’s unprecedented largesse to Abu Dhabi’s Etihad Airways, two other Gulf airlines are circling India for a large increase in air traffic rights.

Should we be concerned? Yes, because by awarding a four-fold increase in weekly seats to Etihad by 2015, the Ministry of Civil Aviation has already gifted a large part of Indian overseas traffic to Etihad and therefore to Jet Airways. Now, if Emirates of Dubai and Qatar Airways are also allowed their wish, not much would be left for Indian airlines in terms of international traffic to and from India.

Knowing the intense rivalry between the Gulf carriers which already compete with each other in most markets, it is no surprise that their daggers are drawn. If Etihad can charm its way into India, so can they.

[caption id=“attachment_843573” align=“alignleft” width=“380”] If Etihad can charm its way into India, so Qatar and Emirates. Pic:AFP[/caption]

Air India, the airline which traditionally has had the maximum share of India’s international traffic, has already been relegated to second position by Emirates, the new ‘official’ carrier of India. The reason is grounding of the Dreamliner (Boeing 787 fleet) but whatever be the reason, Emirates now carriers more Indians internationally than Air India. If Qatar and Emirates are allowed more access to the country and more seats per week, you can well imagine what it would do to Air India and even to other smaller airlines who wish to expand overseas.

A story in the Economic Times this morning speaks of Emirates asking for an increase in weekly seat entitlements to 80,000 from 54,200. Qatar too wants this to be raised to 72,000 from 24,000 a week.

Emirates President Tim Clark told ET that the Indian government’s generosity towards Etihad has “cast the die in this direction” whereas Qatar’s Akbar Al Baker says his airline wants more rights into India. Veiled threats or is the Ministry ofCivil Aviation as keen to please the two emirates in the Gulf as it was in the case of Etihad?

As _Firstpos_t said earlier , just before the Government allowed seat increase to Etihad and the airline picked up 24% equity in Jet Airways, there is an urgent need to question the very basis of negotiations on seat entitlements by India with Dubai and with Abu Dhabi separately. Both are part of the same country which is UAE. Why do the two emirates get to enjoy this immense privilege? By the same logic, why doesn’t India conduct separate talks for seats with, say, Munich and Berlin instead of talking to the Government of Germany for both?

Now that our government has gone ahead and fallen for Abu Dhabi’s demands, it perhaps has no plausible reason to deny Emirates and even Qatar more rights.

On the one hand, the Government is committed to provide Rs 30,000 crore to Air India over a 10-year period to revive the ailing airline and on the other, it is taking away the very source of earnings for Air India.

Concern for AI apart, the Etihad-Jet equity deal was obviously based on and incumbent upon the decision of the Indian Government to increase traffic rights to the Abu Dhabi carrier manifold. But it is now mired in several tangles:

1) Markets regulator Sebi is unhappy with the deal structure and rights it allows to Etihad

2) Janta Party President Subramanian Swamy is threatening to file a PIL in the Supreme Court against the deal and the Government’s decision on hiking seat entitlements to Etihad unless the Prime Minister clarifies

Is anyone going to see sense and not repeat the blunder committed in the Abu Dhabi instance?