Private carriers can fly overseas except to Gulf

Wednesday, 29 December 2004, 08:00 Hrs
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NEW DELHI : Private Indian carriers with a minimum fleet strength of 20 aircraft each and operational experience of at least five years have been permitted to fly overseas - except to the Gulf region.

A meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh here Wednesday reserved the Gulf region exclusively for state-run Air-India and Indian Airlines for three years.

The decision comes as a boon for private sector players like Air Sahara and Jet Airways, but the eligibility criterion of a minimum operational experience of five years deals a blow to low-cost airlines like Air Deccan and soon-to-be-launched Kingfisher.

"The guidelines for allowing private carriers to fly overseas will be framed in a few days," Civil Aviation Minister Praful Patel told reporters after the cabinet meeting.

"Private airlines will be allowed in the Gulf region after three years."

The cabinet took note of the fact that most of the operational revenue and profits of Air-India and Indian Airlines on international routes accrue from the United Arab Emirates, Qatar, Oman, Bahrain, Kuwait and Saudi Arabia.

Accordingly, a calibrated approach was adopted so that the national carriers get sufficient time to adjust to the new competitive environment. The cabinet also called for improved operational synergy between Air-India and Indian Airlines.

A decision was also taken to strengthen Air-India's operations, particularly in view of its inadequate and aging fleet strength of 31 aircraft, of which 16 are owned and the rest are leased.

The cabinet was apprised of the fact that the average age of Air-India's fleet is 15 years and that the last induction of aircraft through purchases was in 1996. Leasing, the meeting was told, is not a cost-effective solution.

The meeting took note of Air-India's proposal to acquire new aircraft, for which a detailed techno-economic plan is being finalised by its management for forwarding it to the government for approval.

Regarding the criteria for private carriers to fly overseas, it was felt that airlines, in a way, are symbols of a nation's prestige and so permission may be denied to non-serious operators.

Another caveat approved by the cabinet is to review the entitlements of private carriers if they reduce domestic operations after obtaining traffic rights on international routes.

Significantly, the cabinet also decided to discontinue the practice of demanding compensation from foreign airlines on commercial agreements mandated by the government with a view to reducing tariffs and ensuring viability of operations.

All new operations of foreign carriers would be free from the obligations of government-mandated commercial agreements, while the existing ones would be reviewed and phased out over the next five years.

Airlines, however, would be free to enter into such cooperative marketing agreements as are mutually agreed upon between them.

Source: IANS
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