Freedom to fly

Prime Minister Vajpayee announced an open skies policy with Asean some time ago, and on a limited basis, private airlines were allowed to fly to some destinations that were previously the sole monopoly of government carriers.

Mr Chandra's group, in fact, has recommended that private carriers be allowed to fly international routes on a more liberal basis.

Dramatic as they are, Mr Chandra's recommendations on allowing foreign airlines to buy stakes in Indian carriers are unlikely to have any major impact right now, since the airline business is in crisis the world over, and few global airlines are interested in buying the government-owned carriers (the same applies to even private airline companies in India which can, even now, bid for Air India and Indian Airlines if they wish). But, when the industry emerges from its slump, the possibilities are enormous.

Of immediate interest, if it is accepted, is the proposal to replace various travel taxes with a sector-specific cess equal to 5 per cent of the air fare, and earmark this to a specific fund (non-lapseable, and not controlled by the ministry of finance) which is to be used to subsidise airlines for operating on non-economic routes in the north-east.

This is vital if, for instance, Indian Airlines has to have any chance of survival. Today, Indian Airlines is forced to fly 17 per cent of its total flights on these loss-making Category II routes, and loses Rs 60-70 crore each year on this account alone.

It loses another Rs 130 crore by being forced to fly extra Category III routes in 2001-02 like the Delhi-Chandigarh-Amritsar one "" while Mr Chandra hasn't made any suggestions regarding this category of flights, reducing Category II losses is a start.

Private carriers like Jet and Sahara have to fly at least 10 per cent of their flights on the uneconomic Category II routes as well.

The recommendations on cutting excise duties and sales taxes on aviation fuel are also welcome. Allowing third-party ground handling is also a good suggestion.

But, given the government's sensitivity to pressure from trade unions, it's difficult to see the proposal being accepted.