Bilateral airline seat quotas have their origin in the Chicago Convention of 1944, held towards the end of World War II. With leading nations trying to rebuild their economies, protectionist policies were incorporated, under which no scheduled international air service could be operated over or in the territory of a contracting state without its permission. Seven decades later, one needs to question the relevance of these quotas. In the globalised world of 2014, most countries, beset with sluggish economies and rising unemployment, are wooing leading airlines. Aviation and tourism have a significant multiplier effect — both for the economy and employment, especially for semi-skilled and unskilled people.
India is no stranger to the concept of an open skies policy. In 2005, India signed an open skies agreement with the US, resulting in unlimited seat quotas between the two countries. This replaced the Indo-US agreement of 1956, which had placed restrictions on destinations, aircraft, pricing etc. The 2005 agreement also provided for seamless code-sharing between Indian and US carriers. Contrary to fears, it did not lead to a complete domination of the Indo-US routes by US carriers.
Unfortunately, we do not have open skies agreements with other countries. Every time a foreign airline reaches its quota limit and wants to enhance frequency, the knives come out. Increasing quotas for one country while not increasing them for another creates further controversy.
Seven decades of protectionism has not helped Indian aviation. We lack a strong, dominant national carrier. Our airports, despite a large population, handle just a fraction of the traffic that the world’s leading airports deal with. Our aviation turbine fuel is one of the costliest in the world. Our aerospace manufacturing, aviation training facilities etc need strengthening. Foreign tourist arrivals in India are an abysmal seven million per year. The only way out is rapid globalisation, a level playing field and transparent policies. We need disruptive strategies — the incremental “case by case” approach will not work.
The ministry of civil aviation should consider implementing the open skies policy, say, for a five-year period, extendable by another five years. If the worst happens, we can always roll back the policy — it is India’s sovereign right. Global airlines will be hurt, but after a few angry statements, they will simply move their fleet elsewhere. The experience with the US proves that most of our fears are unfounded.
There is a genuine apprehension that certain global carriers enjoy sovereign support, subsidised fuel, low airport charges and non-unionised staff, that they may offer dirt-cheap fares and kill the interests of Indian carriers. There are adequate regulatory provisions in India to prevent such anti-competition tactics. We can block the quotas of foreign carriers in the name of protecting domestic airlines. We can wait till private Indian carriers build a large fleet of wide-body aircraft …continued »