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Is aviation min looking to ground SWISS, Austrian Airlines in India?

New Delhi: This could well turn out to be a case of arm twisting one major international airline by Ajit Singh's ministry when it has rolled out the red carpet for another.

At a time when the Civil Aviation Minister and his officials are pulling out all stops to ensure that Abu Dhabi's Etihad Airways gains a smooth entry into the Indian market (via its deal with Jet Airways), they are considering whether to ground two airlines controlled by German carrier Lufthansa AG - SWISS International Airlines and Austrian Airlines.

Ostensibly, this move is being considered because the ownership of the two airlines by German carrier Lufthansa violates the "substantial ownership and effective control clause" under which the two airlines operate in India.

 Is aviation min looking to ground SWISS, Austrian Airlines in India?

Both, the timing of any move by the Ministry to ground SWISS and Austrian as well as its motives lend themselves to some questions.

The substantial ownership and effective control clause mandates that any airline which is flying into India should have its substantial ownership and effective control vested in the Swiss and Austrian governments or citizens respectively, not in a German airline. So this clause was allegedly violated after German carrier Lufthansa bought a majority equity stake in the two airlines when the respective airlines continued to operate under bilateral agreements signed by their respective countries.

Both, the timing of any move by the Ministry to ground SWISS and Austrian as well as its motives lend themselves to some questions.

First, European carriers are traditional rivals of airlines from the Middle East in most markets, including India. So any move to ground SWISS and Austrian should be seen in the context of Etihad soon gaining effective control in Jet Airways.

Second, Lufthansa's acquisition of equity stakes in the two airlines happened years ago and if indeed there is any violation of respective bilateral agreements, it has been ongoing for at least three-four years. Why the sudden interest in cancelling airlines' permits?

Third, Lufthansa is a founding member of prestigious global airline grouping Star Alliance. And this is the reason for the Ministry creating trouble for the German carrier. India has had to face severe embarrassment at the hands of Star Alliance when this when the Alliance refused Air India entry two years back.

The Civil Aviation Ministry wanted Lufthansa to mentor AI's Star Alliance entry, it was spurned and its position on Lufthansa's ownership of SWISS and Austrian now smacks clearly of a vindictive action.

Senior officials in the ministry declined to comment on the matter whereas Ajit Singh was unavailable. A source close to the developments said technically, the Ministry would be well within its rights to ask the aviation regulator DGCA to cancel the flying permits of SWISS and Austrian.

"Unofficially I can tell you that we want Lufthansa to help Air India gain entry into Star Alliance. But Lufthansa is oblivious to our requests, has not given the matter as much thought as it should," this source said.

Speaking to reporters in September last year, Ajit Singh had said "a lot of facilities have been given to Lufthansa to get AI into Star Alliance, we almost made India an open-sky (operation) for them. Now, we will ask them to facilitate AI's entry into Star Alliance". He had alleged that "benefits and rights" were given to the German carrier and this needs to be reciprocated by Lufthansa.

Air India was to join Star Alliance in 2011, but was denied entry when several Alliance members opposed such a move. Unconfirmed reports had suggested then that the Alliance was keen on taking Jet and had pushed the Civil Aviation Ministry for permission to also take Jet in its fold.Star Alliance entry could change the fortunes of AI, enabling it to offer seamless travel to customers, the usage of frequent flier points redeemable with any member airline and connectivity over 193 countries. Star Alliance is the largest such airline grouping in the world.

AI sources said today talks with Star Alliance for another chance at entering the airline grouping are ongoing.

And Frank Puettmann, Head of Lufthansa Group Communications for Asia/Pacific said in an e-mailed response that "both Austrian Airlines as well as Swiss International Airlines are Airlines 100 percent registered, operated and owned in their respective countries. They as well as other European airlines who are members of European Airline Groups fully operate according to international standards and bilateral agreements, including India. "

As of now, no directive has been issued by the Ministry to the DGCA to cancel permits of the two airlines as of now. The source quoted earlier said all foreign airlines operating from India are required to get their schedules approved twice a year - once before the Winter Schedule begins and once again before Summer Schedule. It seems schedules of SWISS and Austrian are being cleared only for 2-3 months at a time. "This is being done to pressurize them to help AI in the Star Alliance matter. But nothing has materialised so far".

Will Ajit Singh see sense and ensure AI's Star Alliance entry through fair means - which includes performance parameters - instead of arm twisting Lufthansa?

Updated Date: Dec 20, 2014 21:32:30 IST