Compensation clause for foreign airlines may go

All government mandated commercial pacts would be reviewed and phased out in 5 years.

In a significant step to open up aviation, the government is likely to discontinue the practice of demanding compensation from international airlines for operating flights to India.

The compensation is part of the mandated commercial agreements international airlines have to enter into with Air-India and Indian Airlines and is based on the premise that Indian carriers need to be compensated for unilateral operations by foreign airlines.

It is now proposed that all existing government-mandated commercial agreements will be reviewed and phased out over five years. International airlines will be free to enter into marketing agreements with Indian carriers. The civil aviation ministry has moved a proposal to the Union Cabinet to bring about the required changes.

India now has commercial air-services agreements with about 100 countries and airlines of 51 countries fly to India.

Other countries have criticised the mandatory commercial agreements. Globally, it is left to airlines to explore suitable commercial agreements.

"With this move, we will also follow global practices. We have received recommendations from various countries to this effect," said a government official, adding that some foreign airlines had threatened to pull out if the practice continued.

The two state-owned carriers receive about Rs 250 crore every year from international airlines by way of compensation for operating flights to India. Once the compensation is removed, fares to the country are expected to fall significantly.

The tourism ministry maintains that fares to India can be brought down considerably if compensation by international carriers is abolished.

Sources in the civil aviation ministry also said once private Indian carriers were also allowed to operate on international routes against the unused entitlements, distributing the compensation would be cumbersome.

Under current policy, the government decides on the nature of the commercial agreements that international airlines need to enter into with Indian carriers like Air-India and Indian Airlines. Some of the aspects that are covered under the agreement are landing slots in airports, points of operations and timing of flights.

In a significant step to open up aviation, the government is likely to discontinue the practice of demanding compensation from international airlines for operating flights to India.

The compensation is part of the mandated commercial agreements international airlines have to enter into with Air-India and Indian Airlines and is based on the premise that Indian carriers need to be compensated for unilateral operations by foreign airlines.

It is now proposed that all existing government-mandated commercial agreements will be reviewed and phased out over five years.

International airlines will be free to enter into marketing agreements with Indian carriers. The civil aviation ministry has moved a proposal to the Union Cabinet to bring about the required changes.

India now has commercial air-services agreements with about 100 countries and airlines of 51 countries fly to India.

Other countries have criticised the mandatory commercial agreements. Globally, it is left to airlines to explore suitable commercial agreements.

"With this move, we will also follow global practices. We have received recommendations from various countries to this effect," said a government official, adding that some foreign airlines had threatened to pull out if the practice continued.

The two state-owned carriers receive about Rs 250 crore every year from international airlines by way of compensation for operating flights to India.

Once the compensation is removed, fares to the country are expected to fall significantly. The tourism ministry maintains that fares to India can be brought down considerably if compensation by international carriers is abolished.

Sources in the civil aviation ministry also said once private Indian carriers were also allowed to operate on international routes against the unused entitlements, distributing the compensation would be cumbersome.

Under current policy, the government decides on the nature of the commercial agreements that international airlines need to enter into with Indian carriers like Air-India and Indian Airlines. Some of the aspects that are covered under the agreement are landing slots in airports, points of operations and timing of flights.

We have received recommendations from various countries to this effect," said a government official, adding that some foreign airlines had threatened to pull out if the practice continued.

The two state-owned carriers receive about Rs 250 crore every year from international airlines by way of compensation for operating flights to India.

Once the compensation is removed, fares to the country are expected to fall significantly. The tourism ministry maintains that fares to India can be brought down considerably if compensation by international carriers is abolished.

Sources in the civil aviation ministry also said once private Indian carriers were also allowed to operate on international routes against the unused entitlements, distributing the compensation would be cumbersome.

Under current policy, the government decides on the nature of the commercial agreements that international airlines need to enter into with Indian carriers like Air-India and Indian Airlines. Some of the aspects that are covered under the agreement are landing slots in airports, points of operations and timing of flights.

Open skies

---

The practice

The compensation is part of the mandated commercial agreements international airlines have to enter into with A-I and IA and is based on the premise that Indian carriers need to be compensated for unilateral operations by foreign airlines

The new proposal

International airlines will be free to enter into marketing agreements with Indian carriers