India's Comptroller and Auditor General Examines Air India

The Comptroller and Auditor General of India has recently released a Performance Audit of Civil Aviation in India. The audit commenced in September 2009 and the report was tabled in Parliament on 8 September 2011.

For me the most interesting part of the report was Chapter 5 which looks at India's bilateral air services arrangements during a period of fundamental change in India's international air transport policy. Of particular concern to the auditors was the extent of sixth freedom carriage by many of the foreign airlines serving India, notably from small city states. Sixth freedom carriage in this context involves a foreign international airline is carrying traffic between India and a third country via its home country. Seeking to limit such carriage is a traditional approach to air rights exchanges dating back to the 1946 Bermuda 1 arrangements between the UK and the USA (see previous post).

What I had not expected to see was the extent to which European carriers serving India have as high a proportion of sixth freedom carriage as airlines from the Gulf. An 18 September 2011 article in the Business Standard reports on the data.

The auditors also focus in particular on the failure of the Indian Ministry of Civil Aviation to secure Dubai's agreement to a "change of gauge" provision. If this was considered important surely the Indian negotiators would have made it the price for agreeing to capacity increases for Emirates?

A 10 September 2011 report in the Indian Express covers the reaction to the report from the Ministry of Civil Aviation.

It would seem that India has no intention of seeking to wind back existing air services arrangements but one has to wonder what impact this report will have on future negotiations, particularly as there was a change of Civil Aviation Minister in India from Praful Patel to Vyalar Ravi in January 2011.

Air India recently had its application to join the Star alliance suspended (see 31 July 2011 media release) and there is now some doubt about its large order for new Boeing aircraft, including the B787.

In the 1960s Air India was one of the great airlines of the world with its wonderful Maharaja character. However, past failures to agree to replace older airliners has left the airline with a relatively old fleet.

India signs replacement air services agreement with Brazil

On 8 March 2011 the Indian Ministry of Civil Aviation released details of a a new air services agreement that the Minister of Civil Aviation had signed with the visiting Brazilian Minister of Foreign Affairs.

There is a flexible route schedule and third-country code sharing is permitted but passenger capacity is limited to 21 operations per week.

India to sign new air services arrangements with Nepal

On 11 February 2010 the Government of India announced that its Cabinet had approved new air services arrangements with Nepal following negotiations held in September 2009. The new arrangements provide for a capacity cap based on the number of seats per week with sub limits for services by Nepali airlines on the routes to Mumbai, Bangalore and Delhi that will be phased out next year.

Fiji negotiates air services arrangements with Turkey

On 5 October 2009 the Fiji Government announced that Fiji has negotiated an air services agreement with Turkey at the recent ICAO Air Services Negotiation Conference (see previous post). The Fiji Daily Post reported on this on 7 October 2009.

Fiji also held negotiations with the United Arab Emirates and informal talks with India, Singapore and Hong Kong.

The release refers to Fiji having a "Look North Policy".

India and Saudi Arabia amend their air services arrangements

On 17 September 2009 India announced that it had approved enhanced opportunities in its air services arrangements that had been negotiated with Saudi Arabia (HT to Mike Swiatek). The enhanced features include multiple designation, a capacity increase and new destination points (see previous post).

India to sign new air services agreement with the Maldives

On 18 September 2008 the Indian Government announced that it had approved the signing of a new air services agreement (ASA) with the Maldives. The draft ASA includes a move to multiple designation and permits third-country code-sharing but retains the traditional "substantial ownership and effective control" provision.

Airlines looking for government support in hard times

With the price of jet fuel having doubled in 12 months and a weakening global economy, the international airline industry is "battening down the hatches" by cutting services, laying off skilled staff and grounding older, less fuel-efficient aircraft.

It will not necessarily always be a case of "creative destruction" or "survival of the fittest." Past history would suggest that many "flag" carriers will again look to survive through government intervention. All around the world there are already signs of this happening:

In South America - on 17 July 2008 Reuters reported that the Argentine government is to takeover Aerolineas Argentinas from the Spanish travel group Marsans.

In Asia - on 10 July 2008 The Times reported that it understood Air India is seeking a "rescue finance package" from the Indian government of UK Pounds 270 million.

In Oceania - on 14 July 2008 Pacific Magazine reported on the latest developments with respect to the finances of Air Tahiti Nui. Note the reference to the airline's 16th recapitalisation being approved last year.

In Europe - on 15 July 2008 Reuters reported that the European Commission has received a reply to its concerns about the Euro 300 million loan from the Italian government to Alitalia.

In Africa - on 16 July 2008 SABC News reported that South African Airways says it needs another Rand 5.7 billion in government funding to reduce its debts.

In North America - the US Air Transportation Stabilization Board continues its existence and Chapter 11 bankruptcy protection provides a safeguard for US airlines.

Meanwhile in the Middle East some of the major Gulf airlines simply do not report their losses and their aircraft orders continue unabated. A 15 July 2008 Wall Street Journal article, with some more positive news from the global airline industry, suggests that Etihad Airways will miss its target of breaking even by 2010.

Finally, tongue in cheek, referring to this poster about a government funded air service means that I have all continents covered!

South Africa making progress implementing 2006 Airlift Strategy

A 23 June 2008 story in Business Day reports on South Africa's good progress in implementing its Airlift Strategy 2006 (see previous post). South Africa is reported to have recently negotiated new air services arrangements with the United Kingdom (a substantial capacity increase), Qatar, the United Arab Emirates, South Korea, Gambia and New Zealand. South Africa is also reported to be in negotiations with Australia, India and the Netherlands.

India and Japan agree to increase air capacity from 2010

On 20 June 2008 the Government of India announced details of new air services arrangements that it has negotiated with Japan to provide for a doubling of airline capacity in 2010.

An extension of the second runway at Narita airport is planned to provide for increased capacity at Tokyo's main international airport from 2010.

India and Iran update air services arrangements

On 6 May 2008 the Government of India announced details of new air services arrangements that it had reached with Iran.

India and China exchange fifth freedom rights

On 20 March 2008 India announced that, following negotiations in New Delhi on 19-20 March 2008, India and China reached an understanding exchanging fifth freedom rights.

The Economic Times reported on 21 March 2008 that this will allow Jet Airways to operate beyond Shanghai to San Francisco.

India and Pakistan negotiate an air routes and capacity expansion

On 15 February 2008 Pakistan's Ministry of Foreign Affairs announced details of new air services arrangements with India. This followed talks in Islamabad. Capacity is increased from 12 to 28 flights per week for each side, Indian carriers may now serve Islamabad and Pakistani carriers Chennai. The new arrangements also move from restricting each side to one airline to allowing each side to designate up to three airlines.

India and Saudi Arabia sign new air services arrangements

On 24 January 2007 the Government of India announced that it had signed new air services arrangements with Saudi Arabia. The new arrangements include a major capacity increase, new route opportunities and multiple designation, as well as a comprehensive liberalisation of arrangements for freighter services.

Hong Kong and India expand air services opportunities

On 19 December 2007 the Indian Government announced that, following talks held in New Delhi on 17-18 December, it had reached agreement on revised air services opportunities with Hong Kong that include an expanded exchange of fifth freedom rights.

Specific mention is made in the statement of the possibility of Indian carriers code sharing with Air New Zealand via Hong Kong.

An official press release NEW was also issued by the Hong Kong Government's Transport and Housing Bureau NEW.

The Hong Kong SAR is independent from Beijing with respect to exchanging air services opportunities.

India and Malaysia liberalise air services arrangements

On 16 July 2007 the official Government of India Press Information Bureau announced that air services negotiations held between India and Malaysia on 12-13 July 2007 had lead to the signing of a Memorandum of Understanding that provides for a major opening up of air routes between the two countries, cargo services, code sharing and multiple designation.

A 19 July 2007 report in the International Herald Tribune provides background.

Reported concerns about draft Indian civil aviation policy

A 26 June 2007 Times Now story outlines the concerns that some other Indian government agencies have about the draft civil aviation policy (see previous post).

Group of Ministers in India to consider draft civil aviation policy

A report dated 16 June 2007 in The Economic Times reports that a Group of Ministers will consider a draft civil aviation policy for India entitled "Vision 2020". A key issue is whether to reduce the five-year period of domestic services required before an airline from India can commence international operations.

India-Singapore air services arrangements expanded

India and Singapore signed a new air services Memorandum of Understanding on 9 January 2007. A summary of the outcome is included in a 10 January 2007 press release from the Singapore Ministry of Transport.

The negotiations enhanced an earlier Memorandum of Understanding signed on 11 July 2006.

India-Qatar air services arrangements expanded

On 20 December 2006, in a new Memorandum of Understanding, India and Qatar agreed to an expansion of the routes and capacity available under their air services arrangements. On 21 December 2006 the Financial Express reported on what extra services Qatar Airways plans to provide to India. The subsequent announcement by the airline about its "huge" increase in services to India is available here.

Not only is there a significant market between India and the Gulf but also Qatar Airways is well placed to exercise sixth freedom rights to carry traffic between India and the European Union via Doha.

India's recent bilateral air service arrangements available on the web

On the web site of the Indian Ministry of Civil Aviation the Directorate General of Civil Aviation publishes information on India's bilateral international air service arrangements, including the full texts of memoranda of understandings reached from 2005 onwards and summaries of all India's bilaterals.