Indian carriers beat foreign rivals in seat utilization

NEW DELHI: Indian airlines are set to witness over 42% utilisation of seats allowed for overseas destinations, government data shows, surpassing for the first time in eight years the capacity used by foreign carriers flying into the country.

According to data provided by the civil aviation ministry, the current winter season will see Indian carriersutilising 42.56% of the quota of seats allowed under bilateral traffic rights, or 377,724 seats per week, compared with about 20% utilisation in the year-ago season.

On the other hand, foreign airlines flying into India are expected to clock 39.78% this season, compared with over 40% utilisation a year ago.

Although domestic carriers were granted permission to fly to overseas destinations in 2004, they were, until now, unable to match the capacity utilisation of foreign airlines flying into India largely due to policy constraints.

According to officials, the improvement in capacity utilisation follows the civil aviation ministry's move to give in advance traffic rights up to three seasons to all airlines.

"Indian carriers will be able to utilise over 50% of their quota by the winter of 2013 if we go by the clearances for foreign destinations the minister ( Ajit Singh) gave a few days ago," a senior ministry official told ET, adding that the move will benefit domestic carriers and flyers alike.

Under bilateral traffic rights, the number of weekly flights or seats a country's airlines are allowed to operate in another nation is fixed through a bilateral agreement.

Experts say that with low-cost carriers starting international operations in the last one year, the situation is no longer tilted towards Air India and Jet AirwaysBSE 1.00 %, which had sizeable international operations.

"The addition of two low-cost carriers (IndiGo and SpiceJet) flying abroad over the last year seems to have revved up the utilisation of bilateral entitlements," said Kapil Arora, Partner (Infrastructure) at Ernst & Young. "In contrast, we must also take note of the fact that a few foreign carriers have also reduced flights to India due to high airport charges," he added.

An executive of a low-cost carriers said Indian carriers were caught in the dual yoke of a five-year mandatory domestic experience required for flying abroad and the Right of First Refusal (RoFR) with Air India, a situation that allowed foreign carriers to sweep away traffic.

"Only over the last year have the two budget carriers completed this artificial restriction and we could do international operations. Also, there is relief with Air India losing their RoFR, else we wouldn't have got even those permissions that we have," the executive, who did not want to be named, said.

This is especially true, as Air India Express, SpiceJetBSE 1.53 % and IndiGo have been competing so aggressively for the profitable Gulf routes that only 1,200-odd seats to the UAE (from India) remain and Indian airlines are hungering for more.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/indian-carriers-beat-foreign-rivals-in-seat-utilisation/articleshow/17236681.cms