Laissez faire in bilaterals expedited Air India fall: CAG

* Auditor says govt policy did not protect Air Indias national carrier status.

The Comptroller and Auditor General (CAG) has held the civil aviation ministry responsible for allowing foreign carriers to exercise sixth freedom rights under which considerable passenger loads was weaned away from Air India deteriorating the national carriers financial health. The report recommends a rollback of some of these rights granted to foreign carriers,and a freeze on bilateral policy to protect Air Indias interests.

The report points out that while foreign carriers,especially those from the Middle East,deployed 98 per cent of approved capacity between two nations,the Indian carriers performed rather poorly,deploying less than 50 per cent.

Most of the carriers from these nations,utilised sixth freedom,which refers to the right to fly from a foreign country to another foreign country while stopping in one’s own country. For instance,Emirates operating the New Delhi-Dubai-London sector,where it can pick passengers from New Delhi and carry them all the way to London.

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The report makes a special mention of the Indo-Dubai bilateral which clearly demonstrates the one-sided nature of benefits to Emirates/Dubai despite Air India’s protest. The Gulf sector was most profitable international segment for Air India and Indian Airlines. Permitting capacity enhancement by foreign carriers and allowing them to operate from interior cities was repeatedly protested by Air India.

Emirates,Qatar Airways,Cathay Pacific,Singapore Airlines derive a large portion of their passenger traffic revenues from sixth freedom traffic,the report said. The ministry did not adequately address the undue benefit to foreign airlines by the sixth freedom,which allowed them to divert traffic from India to other destinations,it noted.

The watchdog has questioned the ministry’s decision from 2004-05 onwards to allow carriers to repeatedly grant additional capacity while Air India continued to perform poorly and protested against enhanced bilaterals.

Simultaneously,it also allowed domestic private carriers to fly abroad in 2005,which expanded the Indian market but posed a problem for Air India.