The Hindu Business Line : Open skies with Asean

The Civil Aviation Ministry has been true to form in expressing reservations about granting freedom to airlines from the Association of South-East Asian Nations to mount as many flights to this country as they want. Asean wants to introduce free skies within the grouping by 2010 and has invited India to the fold, but the Ministry is not exactly looking forward to the party. Its anxiety stems from the enfeebled state of the two public sector carriers, Air India and Indian, which it feels would be easy meat for the globally well-connected airlines of South-East Asia if the latter are allowed free access to Indian airports. Air India's share of the market for passengers flying to and from India has already dipped to 19 per cent from over 30 per cent a couple of decades ago. The Ministry wants time till 2015.

Pulling the protective cloak over the two public sector airlines may be a reflex action. But if the Ministry believes it is securing the larger national interest as well, it must perish the thought on two counts. One, any attempt at stifling competition can only work against passenger interests. Those who fly the domestic routes can look back with considerable satisfaction on what free skies and unhindered competition have done. With fares at unprecedented low levels — often lower than the taxes levied on them — domestic traffic has grown at an annual rate of over 40 per cent at many airports round the country, with thousands of first-time travellers thronging the counters. Compare this with the stunted growth in international traffic. Government restrictions on overseas flights may have eased over the years to permit a whiff of competition and a reduction in fares, but what remain are enough to frustrate airlines and travellers.

Two, protecting Indian business against foreign business may, at times, be a legitimate goal of public policy. But protecting national interest cannot be synonymous with merely shielding public sector airlines from competition especially if the task involves immobilising the private Indian carriers in a suffocating regulatory bind. Look at the imbalance in policy: Indian private carriers need five years of domestic flying experience before they will be permitted to fly overseas. Yet, a foreign carrier such as Air Arabia, just three years old, gets permission to fly into India. The discrimination is galling especially because some of the young domestic private airlines have performed well, the overall private market share being 80 per cent. As it grapples with the Asean invitation, the question the Government must ask is when the country's airlines will be ready to compete with the best in Asia. It will be surprised to learn how soon that will be.