Govt's bilateral policy marginalising Indian carriers: Unions

The unions want the government to give out the bilateral air traffic rights only when Indian carriers have inducted new and adequate number of aircraft matching the capacity and strength of the foreign airlines.

The Civil Aviation Joint Action Forum, an umbrella body of several Air India unions including those representing pilots and cabin crew, claims that foreign carriers have taken advantage of the liberalised air traffic rights whereas carriers like Air India and Jet Airways have suffered as they do not have enough capacity or aircraft to fly to cities in these countries.

It says AI is operating seven flights a week while British Airways has 21. Similarly, Lufthansa has 32 flights to India with seven entry points, while AI has four services to Germany with single entry point.

The CAJAF says the new bilaterals with several governments, including the US, UK and European Union, have led to an "absolute increase" of 10,36,330 seats between December 2003 and June 2008.

And the weekly seat capacity into India in the last four years have grown by a whopping 356 per cent, with foreign airlines making the most of it.

The unions' body says Gulf carriers like Air Arabia and Etihad were given "huge" capacity from several points in India in the last one year.

Since last May, Cathay Pacific has increased its weekly flights between Hong Kong and Mumbai from four to ten, to Delhi from seven to 14 as new points of call were granted to it and its subsidiary Dragon Air at Chennai and Bangalore.

"Now this high yield route is unprofitable for Air India and Jet Airways", the CAJAF said, adding that while Air India could not mount additional capacity, Jet postponed launching its Delhi-Hong Kong operations.

The combined flights of Indian carriers was "only a fraction" of what was being deployed by the foreign airlines, it claimed.

When competitors increase capacity and the home airlines do not, then the latter's capacity share and market share declines, leading to a drop in revenue load factors and the home airlines incurring losses. In a bid to compensate for this decline, "prices are always slashed", CAJAF said.

This was a major reason for the losses of Indian carriers and decline in their share of the outbound home market which fell from 38 per cent in 2004 to only 18 per cent in May 2008. Whereas the world over, the average international airlines enjoyed a domestic outbound market share of 45 to 50 per cent.

"This is precisely what happened to Air India in 2007, 2008 and 2009," the presentation said.