If newspaper reports are to be believed, Indonesia's Lion Air, United Arab Emirates's Ras Al Khaima (RAK) Airlines and Saudi Arabia's Sama Airways are looking at or are keen to fly to various cities in India to fly passengers out to different destinations across the globe.
In other words, carriers of all manner and hue are cashing in and flying Indian passengers from what can now only be described as nooks and crannies of India. Many of the airlines are quite unknown to passengers or even the authorities in India. Several are less than five years old in their own countries. Indeed, in many cases, there is no real system of verifying the airlines' ownership structures, credentials or back-end facilities or systems.
That's why I am quite amazed at the stubborn stance taken by Indian policymakers that scheduled domestic carriers in India must complete at least five years of flying within the country before they fly overseas.
In fact, in May, Kingfisher Airlines is expected to take delivery of some of its wide-bodied aircraft which they had expected to deploy on international routes. Chairman Vijay Mallya had probably banked on getting the Indian authorities to change their mind on this rather illogical stipulation but met too much political resistance. Till August, he's likely to use the aircraft on domestic routes, which is quite an expensive proposition. After August, he's expected to get some kind of clearance to fly through the merger with Deccan, the workings of which no one quite understands. Similarly, the Kerala government has been pushing for permission to set up an airline to fly to the Gulf. There is an opportunity they have spotted and want to cash in on. However, the five-year stipulation has ensured that they can't get the permit.
But despite discussing it with many aviation players and experts including senior government officials, I can't fathom the logic behind this condition. What is so sacrosanct about five years? Why not four or for that matter three? What will have been achieved or proved in five years? Surely it is not the case that because the other private players (Jet and erstwhile Sahara) had to wait for five years, so should the rest. Should not policy adapt to the changing needs and environment? Why should all kinds of foreign carriers capture market share and have a first mover advantage over your own airlines? Indian aviation players say that it is discriminatory to have different rules for foreign start-up carriers and different ones for Indian carriers. They argue that it is possible to have an Indian start-up interested in only flying overseas and that regulatory space (including all requirements that must be met) needs to be created for such investments.
On the other hand, what if an airline has flown domestically for five years, run up huge losses during the period, been unreliable with its schedules and operations, cancelled flights at random and is left with a weak fleet and balance sheet? Will the policy then say that since the airline has done five years, it can fly overseas "" never mind its financial health, past record or fleet strength?
The only person I could find who felt this stipulation was justified was, not surprisingly, a senior Jet official. In his view, it is perfectly justified. He said that Jet had been and was going through setting up its international network, so he should know. He said that unlike in the Western countries "" where a lot of services and back-end support and facilities can be outsourced "" in India, the carrier will have to build its own for a scheduled operation. Unless it does, it is not certain it will be able to operate successfully. Clearly, this needs a lot more capital. Dealing with a 14-hour flight, he said, is very different from dealing with a two-hour one. Since the government is designating the carrier, it has to be certain and be able to vouch for who it is designating.
He may have a point there. Certainly, if airlines with poor records and credentials start flying overseas, it can be a cause for worry. In the mid-1990s, for instance, several airlines flew domestically but did not last very long. Recently, an Indian carrier, despite its owners being raided by the CBI, was given a scheduled operator's licence for regional operations. Similarly, other carriers have been given licences but have not had the financial wherewithal to start operations or have had to suspend them midway.
But in cases like this, isn't the better solution to be more careful when granting scheduled operator licences within the country. What if an airline like this does manage to pull through domestically for five years? Will it automatically be eligible to fly overseas? Whichever way one looks at it, there is a very strong case for a case-to-case approach.
