Save national airline by cutting Gulf carriers’ trips, warns Indian auditor
India’s national auditor said Emirates and other Middle Eastern carriers should be forced to reduce the number of flights they operate to India in order to protect state-owned Air India.
A report by the Comptroller and Auditor General of India (CAG) on Air India, tabled in Parliament on Thursday said, “Massive expansion of bilateral entitlements in respect of several countries (notably in the Gulf, Southeast Asia and Europe) has facilitated several foreign airlines (predominantly Emirates) in tapping the vast Indian market and funnelling such traffic over their hubs to various destinations in the US, the UK, Europe and elsewhere.”
“The entitlements exchanged are vastly in excess of the genuine flying requirements between the two countries and implicitly allow mega airlines to exploit sixth freedom traffic,” the report tabled on the last day of monsoon session said.
Sixth freedom traffic under the International Convention on Civil Aviation in 1944 pertains to the right of a foreign carrier to fly from one foreign destination to another, while stopping in one’s country.
CAG said the Gulf sector was Air India’s most profitable segment before the liberalization. Sixth freedom traffic to and from India was largely captured by Emirates, Jazeera Airways, Qatar Airways, Thai Airways, Singapore Airlines, Lufthansa, British Airways, Cathay Pacific, Continental and Northwest Airlines.
The liberalization led to overcapacity on both domestic and international routes, leading to lower occupancy, low yields and heavy cash losses to Indian carriers.
The combined effect of loss of revenues from international routes and huge debt burden resulted in AI’s financial deterioration, CAG said. Expenditure increased dramatically.
The CAG has recommended a rollback of entitlements for airlines predominantly dependent on sixth freedom traffic, notably from Dubai, Bahrain and other Gulf countries.
Emirates, Abu-Dhabi-based Etihad Airways and Qatar Airways have boosted competition for Air India as they take advantage of the Middle East’s oil wealth and geographical location to develop global networks. Dubai-based carriers, led by Emirates, offer more than twice as many seats per week on Dubai-India routes in the year ended March as Indian airlines, the auditor said.
Flights to the Gulf region, where 2.2 million Indians migrated for work between 2007 and 2009, accounted for 49 percent of Air India’s overseas services, according to the civil aviation ministry’s annual report for the year ended in March.
The state-controlled carrier is losing 6 billion rupees ($130 million) a month, Vayalar Ravi, minister for civil aviation, said in parliament last month.
Aziz Khan, Emirates’ external spokesman in India, said he couldn’t immediately comment. K Swaminathan, spokesman for Air India, wasn’t available.
The beleaguered Indian carrier has recently been under fire for mounting losses and deteriorating performance
“This is exactly the kind of opposition Emirates has received elsewhere. It is pure protectionism for home-market carriers that in some cases are weak and poorly run, which fits Air India’s description,” Scott Hamilton, a US-based aviation analyst with Leeham Company, told Gulf News.
Emirates has once again come under attack for aggressively expanding international operations. In recent years, the Dubai carrier has been caught up in a struggle to convince governments and flag carriers of various countries in order to expand its global footprint by gaining additional landing rights and frequencies in markets like Canada, Germany and Australia.
India is one of the most lucrative routes for Emirates and other Gulf carriers. Emirates alone operates 185 weekly flights to ten destinations inIndia, as per its July statistics.
Emirates flies 185 weekly flights to 10 destinations in India using Boeing 777-300 aircraft, according to a statement from the carrier in July.
The carrier has said it wants to fly Airbus’ A380 super jumbos to India as well.
The government has so far failed to ease regulations that bar overseas carriers from flying aircraft bigger than the Boeing 747s into the country.
Between them, the Gulf’s three big aviation giants -Dubai’s Emirates Airline, Abu Dhabi’s Etihad Airways and Doha’s Qatar Airways – have around 473 aircraft on order from manufacturers Boeing and Airbus.
When asked if he was going to order any more mammoth A380s super jumbos this year, Tim Clark, the president of Emirates Airline, pointed out that while he would love to, there simply isn’t the space at Dubai Airport to place them.
The local aviation sector is certainly set for unprecedented growth. Boeing expects Middle East carriers to buy up some 2,520 aircraft by 2030 as part of a $4 trillion global market for new planes and the pressure is on for local aviation infrastructure to keep pace.
The region’s aviation industry has been earmarked as a key growth sector for the Gulf, with tens of billions of dollars to be spent on regional airport development in the next decade.
Dubai International Airport, home to Emirates – the world’s largest carrier by international traffic – expects to be the world’s busiest airport by 2015 with some 75 million passengers a year.
Sources: Gulfnews, Mydigitalfc, arabianbusiness