The government proposes to review bilateral air services agreements, and do away with existing commercial contracts over the next two years. This could lower fares, as tickets become more easily available on some crucial international routes like the flights to the Gulf.
The proposal
could remove exclusivity for state-owned carrier Air India and set the stage for an open-skies regime that would allow private local airlines to compete on these routes.
The national civil aviation policy — which has been referred to a Group of Ministers — has proposed that commercial agreements be done away in phases by December 31, 2009.
“The policy proposes to do away with the existing commercial agreements in a phased manner to allow Air India to adjust for the potential loss,” a government source said.
Mark D’Martis of consulting major KPMG said this might result in potential revenue loss for Air India in the short-run, but international alliances could offer greater efficiency for the carrier.
Sandeep Sonoy, senior analyst with brokerage firm Pioneer Intermediaries, said Air India would feel pricing pressures after Jet Airways’ maiden flight takes off to the US in August. A similar situation was expected in the Gulf sector.
Airlines can join global aviation alliances and sign reciprocal code-share agreements. Air India is in discussions with Star Alliance that has Lufthansa and Singapore Airlines as partners. Jet Airways chief Naresh Goyal on Sunday said his airline was open to an alliance with Air India.