Is Indian Aviation suffering from self-inflicted poor GLOBAL CONNECTIVITY?

Qatar Airways' mercurial CEO Akbar Al Baker set the cat among the pigeons recently, when he expressed his desire to set-up an Indian subsidiary along with Qatar Investment Authority. What Al Baker perhaps missed out was the Foreign Direct Investment Circular of 7th June 2016, which allows 100 per cent FDI, only if there's no investment by a foreign airline. If a foreign airline is involved, the FDI limit is 49 per cent.
This is akin to saying we will allow 100 per cent FDI in telecom, as long as, there is no investment by any global telecom company. The circular also states that substantial ownership and effective control of an airline has to be vested, in Indian nationals. The gazette notification of 28th November 2016 proposed to do away with the Indian ownership clause, but the final decision is yet to be received. An airline cannot have 100 per cent FDI and Indian ownership, at the same time.
IT'S BIZARRE!
India has opened up sensitive sectors like Defence, Telecom and Banking for 100 per cent FDI, ditto for aviation sub-sectors like airports, cargo, ground handling and aircraft maintenance. In no sector that has been opened up, do we see global brands decimating Indian ones. There are enough safeguards in anti-competition laws in India, which can be used to discourage foreign carriers from “dumping” capacity in India, at dirt-cheap airfares.
Some belittle the success of certain Gulf carriers, by alleging heavy State subsidies. If subsidies could help create world-class airlines, there are far richer countries, which could have become world leaders in aviation. With the crash in crude oil prices, the ability of Gulf nations to subsidize their carriers is further challenged. The security risk in the Gulf is worsening, as has been seen in the case of the e-gadget ban. This is an opportunity for India to leapfrog!
India suffers from poor global air connectivity and it is self-inflicted. While leading airports provide connections to over 200 global destinations, India's largest airport, Delhi, connects only around 70, most of them in Asia. India's largest international carrier, Air India flies to a mere 37 international destinations, as compared to over 150, by Emirates and Qatar Airways. Gulf and ASEAN carriers cannot increase flights to India, as many of them have exhausted their quota.
Long-haul carriers from the US and EU are not expanding their capacity on Indian routes, given the extreme competition and price sensitivity. Indian carriers, especially low-cost carriers, have announced no major plans for long-haul routes. It is a classic Mexican stand-off and does not bode well, for India. Many assert that no country allows FDI in airlines. That's wrong!
What is also conveniently left unsaid is that most leading countries allow “open-skies”, despite severe opposition from their own domestic airline lobby. For instance, the USA and European Union, the key architects of Chicago Convention, 1944, junked the bilateral quota system and signed the open-skies agreement in April 2007. NCAP 2016 - India's National Civil Aviation Policy allows “open skies” in India for countries, beyond 5,000 km. Between “open skies” and 100 per cent FDI, the latter has a better impact on investments and jobs, hence, should be the preferred option. The interests of tourism and associated sectors like airports, cargo, maintenance and ground handling etc., are far larger than that of the airlines.
There is a fear that 100 per cent subsidiaries of foreign airlines would become feeders to their own hubs. This is alarmist and over-simplified! India allowed 49 per cent FDI in airlines, way back in September 2012. Nothing stopped a foreign airline from taking a minority stake in an Indian airline and making it a feeder airline. On the contrary, Gulf carriers may use Indian airports to launch east-bound flights and ASEAN carriers may do the same, on the west-bound flights.
Indian carriers like Air India have the advantage, because they offer non-stop flights to the US, EU and Far East countries, which many corporate travellers prefer. There is a canard being spread that foreign carriers will “steal” our traffic. Passengers are not sheep, which can be stolen. Tourism is a two-way traffic. Per capita income in developed countries is 25-30 times that of India. India's inbound foreign tourist traffic, therefore, can be several multiples of Indian tourists going abroad. India has unparalleled tourist attractions to offer — natural, historical, cultural and religious. Despite this, India's foreign tourist arrivals in 2015 were a mere 8 million, as compared to
Thailand's 30 million and China's 57 million.
Blocking global airlines to prevent “stealing” of Indian passengers has been a self-goal. Ironically, some of us overplay the “swadeshi” card and then happily flaunt our
iPhones, Rolex and BMWs. When all else fails, some bring up the bogey of “national security”. Effective security comes from robust intelligence gathering and inter-agency coordination, not by blocking FDI. Security risks can come through airports, cargo, maintenance, and ground handling too, all of which are allowed 100 per cent FDI. Allowing 100 per cent FDI will bring greater investments, competition, tourists and jobs. Even on international flights from India, many of the pilots, cabin crew, engineers and ground handling staff come from India, and not just from the home country of the foreign carrier.
India aspires to become the largest aviation market by 2030, from number four currently.
It has the economy, demographics and tourism attractions to get there. The only way we can get there is by shunning old mindsets and welcoming the world's best airlines to invest in India. The
choice is ours!