Govt drops plan to bid out unused air traffic rightshttps://indianexpress.com/article/india/india-news-india/govt-wont-auction-unused-air-traffic-rights-2758090/

Govt drops plan to bid out unused air traffic rights

Move follows opposition from domestic carriers, IATA

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The existing rule of domestic airlines having minimum five year experience and 20 aircraft for being eligible to fly on international routes is proposed to be replaced by only 20 aircraft requirement and a minimum of 20 per cent capacity being deployed domestically. (Photo: Thinkstock)

The civil aviation ministry has dropped the proposal of auctioning unused bilateral traffic rights on international routes, as per a draft on National Civil Aviation Policy circulated for inter-ministerial consultations last month, official sources said.

Domestic carriers as well as the International Air Transport Association (IATA) have strongly opposed plans to auction unused bilateral rights.

The government has also tried a balancing act on replacing the much-debated 5/20 rule for flying overseas, while at the same time giving older carriers the flexibility to withdraw capacity deployed on unviable routes which is in excess of the minimum requirements, the sources said.

The existing rule of domestic airlines having minimum five year experience and 20 aircraft for being eligible to fly on international routes is proposed to be replaced by only 20 aircraft requirement and a minimum of 20 per cent capacity being deployed domestically.

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If approved, the proposed policy will enable new carriers like AirAsia India and Vistara — both operated by the Tata Group via joint ventures with foreign partners — to operate internationally without having the minimum five-year experience as required in the existing regime.

Older carriers such as Jet Airways, IndiGo, SpiceJet and GoAir — all members of the Federation of Indian Airlines — will not have to seek government permission for withdrawing capacity deployed on economically unviable routes, above minimum requirement, as per the proposed policy.

Sources said the aviation ministry expects to complete inter-ministerial discussions on the policy in about two weeks, after which it will submit a final draft to the Cabinet for approval. The ministry decided to drop plans to auction unused bilateral traffic rights as it was opposed by industry across the board as well as many Members of Parliament, the sources said.

In its submission to the aviation ministry, the Federation of Indian Airlines had said: The proposal to auction seats to countries within 5,000 kms is (also) impractical, untenable and unworkable as bilateral rights are sovereign rights of the country, to be utilised by the designated carriers of that country only. They are not purposed to generate transaction values with foreign carriers.

In its comments on the policy, IATA has said that auctioning for traffic rights can lead to concentration of the market in a few powerful hands and will be an anti-competitive move.

In its initial draft policy released in October 2015, the civil aviation ministry has proposed: “For short haul countries partly or fully within 5,000-km radius, where domestic airlines have not fully utilised their quota, additional seats above existing bilateral rights would be allotted by bidding out these rights for a three-year period, without requiring reciprocity, the proceeds of which will go to Regional Connectivity Fund (RCF).”

The government had also proposed to enter into an open sky agreement on a reciprocal basis with SAARC countries and countries with territory located entirely beyond a 5,000-km radius from New Delhi.

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