Aviation policy: Adani Group pushes for more international flying rights; airlines caution

India’s aviation policy has created a gap between airport operators and airlines as Adani Group is urging the Centre to expand international flying rights while others argue for limitations. The infrastructure gaint, which operates eight airports across India, has asked the government to accelerate negotiations with several countries, including the UAE, Saudi Arabia, Qatar, Singapore, Indonesia and Malaysia, to allow overseas airlines to operate more flights to and from India, ET reported. The move is aimed at driving traffic through its airports, where it is investing heavily in new terminals, runways and passenger facilities. The push comes at a time when Tata-owned Air India and IndiGo, India’s two biggest airlines, have cautioned against opening up Indian skies too quickly. Air India has maintained that expanded access for foreign carriers, particularly those based in West Asia, could subject Indian airlines to what it has described as ‘unfair competition’. Adani Airports Holdings recently opened the Navi Mumbai airport to commercial operations on Christmas. In a communication sent to the government last month, the group said that greater international capacity would allow Mumbai to develop into a global aviation hub, according to documents reviewed by ET. The Adani Group has outlined plans to invest $11.1 billion by 2030 in terminals, runways, aircraft-handling infrastructure and passenger amenities. Jeet Adani, director at Adani Airport Holdings, recently detailed the scale of the proposed investments. “This will be a criminal waste of assets being built by airports and penalising the Indian customers who will have to pay higher prices due to lack of flights,” an Adani Group official told ET. “Increasing access and options for passengers is a crucial aspect of transforming Indian airports into global hubs, and that should not just depend on when Indian airlines are ready to compete.” International flying rights are governed by bilateral agreements and are granted on a reciprocal basis. Since 2014, governments led by Prime Minister Narendra Modi have taken a guarded approach to expanding such rights, especially for airlines from West Asia. The stated objective has been to shield Indian carriers while encouraging domestic airports to evolve into transit hubs similar to Dubai and Singapore’s Changi Airport. Under the National Civil Aviation Policy introduced in 2016, India set a threshold under which additional rights would be considered only after Indian airlines had utilised at least 80% of their existing entitlements. This policy stance has meant that foreign airlines have been unable to add capacity despite sharp growth in international travel demand, contributing to higher airfares. One example is Dubai, where seat capacity was last increased in 2014. Although both Indian carriers and airlines such as Emirates and Flydubai have fully used their allocated rights, no further expansion has been approved so far, ET reported. The government’s hesitation reflects concerns that passengers could increasingly shift to Gulf airlines, which deploy large wide-bodied aircraft and route travellers onward to Europe and North America through hubs such as Dubai, Abu Dhabi and Doha. “For some of the other carriers, more than 70% of traffic they are carrying from India is transiting and going somewhere else. So, I firmly believe that it’s in India’s interests to make sure the pace of liberalisation is such that it doesn’t undercut investments being made by Indian entities,” Air India CEO Campbell Wilson said at a recent public event. At the same time, the restrictive policy risks affecting airport operators that are expanding capacity in anticipation of higher traffic, even as India’s largest airlines, Air India and IndiGo, have yet to outline aggressive international growth plans.