‘Ease norms for airlines to fly abroad’:

‘Ease norms for airlines to fly abroad’:

Context:

The economic survey has asked the government to build airline hubs in India which could compete with the hubs in the UAE and South East Asia that were taking away Indian traffic to the US and Europe from domestic carriers.

Introduction:

• The second volume of the Economic Survey 2016-17 released on Friday.
• It has also recommended “committed action plan on divestment of Air India to enhance its operational and management efficiency”.
• The Survey has suggested a mix of protectionism for domestic airlines and liberal norms for flying abroad to bolster their share in international air traffic.

Key points:

• As per the survey estimates about 38% people fly in and out of India through Indian carriers as per estimates for January-March 2017.

Survey highlights:

•  Indian domestic airlines have a very low share in international traffic to and from India
• The Survey said that the government should focus on building its own aviation hubs as “India is an advantageously placed in terms of geographic location as Dubai or Singapore.”
• It noted that the capacity entitlement between Dubai and India have increased sixfold between 2003 and 2017.
•  It increased nine-fold in the case of Oman and 12-fold in the case of Qatar.
•  The Survey pointed out that the o/20 rule to allow for overseas operations should be further diluted.
• In its 2016 policy, the government had diluted the contentious ‘5/20 rule’ that required an Indian airline to have five years of domestic flying experience and 20 aircraft in its fleet before it could fly to overseas destinations.
• According to the present norm, known as the 0/20 rule, a domestic airline needs to deploy at least 20 planes in the domestic sector before getting the right to fly on international routes from India.

Reasons:

• Factors like foreign airlines utilizing the sixth freedom of the air, expansion of capacity entitlements under bilateral air service agreements with foreign countries, lower utilization of India’s own capacity entitlement, the 0/20 rule and fleet constraints are responsible for the same.

Sixth freedom:

• Sixth freedom is the bilateral air traffic right to fly from a foreign country to another foreign country while stopping in one’s own country.
• For example, Emirates operates flights between India and the U.K. while stopping at Dubai, its home state.
• Sixth freedom traffic constituted 61.14% of the total international traffic in 2015-16, increasing from 59.15% in 2014-15.
• The Survey said this had reduced the share of direct, long-haul flight for Indian carriers form 25% in 2011-12 to 20.5% in 2015-16.