Traffic Rights: Then and Now! Will Indian Carriers Hub over Dubai?

News on airline bilateral rights between nations always attracts attention. Given the ever-growing interest in travelling international, India remains one of the fastest growing originating markets globally. This is where the world’s single biggest aircraft orders are coming from, it is a most lucrative place to be. Why are bilateral rights important? They determine how many seats you can offer on any country-to-country basis. This determines finally the price of each ticket. Connectivity plays an important part in business and economy and commercial global play.

The background: Indian carriers were not growing two decades back, our national carrier was limping, especially after the failed merger of Air India and Indian Airlines; its inability to service the purchase of newly ordered planes added to its woes. How would an Indian travel? European carriers did not have the appetite and it was the Middle Eastern airlines that looked for markets, they found one big one in their own backyard. They had the money, the appetite to buy more planes, wanted to develop tourism as an industry, creating hubs was a big growth strategy. Our planners were not growing airports, there was little understanding of aviation as a big business. It is the Middle East carriers that found a win win-win situation, regardless of all conversations, regarding methodology and deals that made their business possible. These brought India to connect with the world.

The present times: Granting bilateral rights has ceased to be a matter of lobbying, there has been a uniform suspension by and large. Especially since 2014, when the present government took charge. It was their understanding that this was a grave area where traffic rights were being traded, they put to a stop on them, a big clamp down. Air India’s woes continued, and in between there was the covid lockdown, the zero-travel period, the subsequent revival; not to mention the long-awaited sale of Air India, and that too, to a deep pocket buyer like TATA. Indian carriers were not exactly growing, except for Indigo adding competitive capacity, we saw the fall of the mighty Kingfisher and Jet Airways. Spicejet did not live to its promise. And, now Go First also went down. Dismal scene, overall, with only two airlines coming through.

Newer destinations are being added significantly, especially Indigo is bringing new city pairs on its global network. Vistara and Air India are connecting globally, we are witnessing a resurgence, with these two carriers.

Our airports are adding adequate muscle. Mumbai and New Delhi will soon have a second airport each. Airport capacity is now for the first time in a position to provide hub traffic; in fact, multiple hubs, to rival each its own. Like Chennai can become an alternative to Colombo, Delhi and Mumbai to Dubai and Abu Dhabi.

Indian travellers have emerged among the world’s best bet. There is demand for more flights. The government says they will calibrate the growth in seats offered, giving our Indian carriers a chance to add capacity before we allow more flights to foreign airlines.

So, we have the aircrafts, the airports, the travel demand and a government willing to understand, support and grow the sector and the eco-system that it needs around it.

Going forward: So, where do we go from here? Given the steady market growth, do we wait for a few years more till our own capacity is closer to the foreign capacity? Some kind of calibrated opening would be desirable to keep India well connected to ensure airfares can come down, as price is a bigger deferent at present. Airlines are happy but the customer is not.

Media reports suggest that India could be seeking 4 seats for every 1 seat given in any new bilateral negotiation with the UAE, Give the fact that only some 25% of the traffic going from India to the Gulf is destination bound, the rest is going beyond, what we call the fifth and sixth freedom rights, given that every 1 seat we get will be UAE bound, are we saying we will build a hub over Dubai and Abu Dhabi in the next few years? That is an ambitious target, to say that we will muscle around our travelling numbers and also pick up traffic ex-Dubai? That indeed will be a new chapter for Indian air transport industry.

On the flip side, this could be just a conjecture. More likely, this subject will be deferred to post election time. The popular opinion would be that we build our own hubs, Indian travellers want direct, non-stop flights. Presently UAE traffic rights are negotiated separately with Dubai, Abu Dhabi, Ras Al Khima and Sharjah. If these had been consolidated, say sources, this might have released some unused capacity for EK. But presently it is learnt that Etihad is increasing flights, both directly and through Air Arabia JV, leaving no room for enhancement at present.

What about the European carriers? The Indo-US route has an open sky policy and does not need any rights. But open we must, liberal as we need to be!

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