Indian carriers lose out in air service deal with UK

The draft India-UK Air Services Agreement provides that British carriers like British Airways and Virgin Atlantic be exempted from paying all taxes and levies in India.

The agreement, which will be taken up the by the Cabinet for a discussion tomorrow, will provide a significant cost benefit to airlines from the UK as they will be allowed to repatriate all their income from the Indian operations, excluding the cost.

But the treaty does not provide similar benefits to Indian carriers like Air India, Jet Airways and Air Sahara for their UK operations, officials told Business Standard today.

Officials said though more flights would be allowed by both countries, the issue of allotting more slots to Indian carriers at the Heathrow airport in London had been left unresolved. "It will still be subject to the availability of slots and no preference will be given," said an official.

A bulk of the new flights to be operated by the airlines from the UK will be allowed to land in Chennai, Kolkata, Kochi and Hyderabad. Indian carriers will be allowed to fly to Glasgow, Edinburgh and Bristol in addition to London, Manchester and Birmingham.

The civil aviation ministry circulated a Cabinet note containing the agreement this morning. The agreement, finalised with the UK government recently, is expected to be signed during British Prime Minister Tony Blair's three-day visit to India starting tomorrow.

Officials said the tax provisions in the agreement are similar to the provisions in the aviation treaty signed with the US recently.