Thursday, May 26, 2016

India Considering Auctioning Bilateral Rights?

The Modi government in India has been developing a new aviation policy, and while public release of the proposal was thought to be imminent, reports today suggest the release date may have been postponed. The plans are rumored to include a possible elimination of the 5/20 rule, which prohibits Indian carriers from flying internationally without at least 5 prior years of domestic operation and a fleet of at least 20 aircraft. Some form of price cap on tickets is also reportedly under consideration, though the stringency of the cap and mechanism by which it will be effected is unclear. Most interestingly, the delay in the release of the policy is reportedly related to the government's deliberations over the possibility of auctioning off air traffic rights for foreign carriers. This would be a significant departure from existing international practice, by which traffic rights are exchanged through bilateral trade agreements, typically on a reciprocal basis. It is unclear precisely how India's plan would work, presumably the rights would only be made available to carriers from States with which India already has an existing bilateral air services agreement. The International Air Transport Association has expressed reservations about such a plan.

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