May 12, 2007

India's Friendlier Skies

Mumbai, India - India’s government is likely to waive a five-year waiting period for airlines to fly international routes, a move that will improve revenues for several new airlines that are losing money despite a boom in air travel.

The rules will be reviewed at year-end when the monopoly of state-run airlines on lucrative Gulf routes comes up for renewal, Civil Aviation Minister Praful Patel told reporters in New Delhi. Approvals are likely to be given on a case-to-case basis.

“The issue would be reviewed on the basis of the need of the sector and the ability of the carrier to be able to serve international routes,” Patel said.

By early next year, the government could also let private airlines operate on the Gulf routes, flown by thousands of Indians who travel to the region to work. But airlines may still need to have a minimum fleet of 20 aircraft before they can fly these routes, media reports said.

At present, only state-run Air India and private sector airlines Jet Airways and its newly acquired company Air Sahara are can fly on international routes.

Airlines like Kingfisher, Air Deccan, IndiGo and GoAir have sprung up in the last few years to cater to a domestic passenger market that grew nearly 50% last year.

But India’s infrastructure is ill-equipped to deal with the boom in air travel. Crowded airports are struggling to cope with the increase in passengers and flights, especially in key cities like Mumbai and New Delhi, leading to regular delays on domestic routes.

And dirt-cheap fares in the competition for new passengers have resulted in recurring losses for large-scale budget airlines like Air Deccan. Kingfisher and Air Deccan have reportedly been lobbying for opening up international routes sooner.

Kingfisher has already placed orders for five Airbus A380s starting from 2010, when it hopes to start flying to the U.S. The A380, which can seat as many as 550 passengers, does not yet operate on routes out of India.

By Ruth David

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