India is threatening to withdraw traffic rights from subsidiaries and Austrian Airlines, according to documents obtained by Aviation Week. In a Ministry of External Affairs letter to the Swiss embassy, the Indian government states that Swiss International Air Lines “does not meet the substantial ownership and effective control (SOEC) clause as mandated by the existing bilateral air services agreement between the two countries, therefore as per the ASA, is not entitled to operate.” A similar letter is believed to have been sent to the Austrian embassy. Lufthansa did not comment other than saying that air service negotiations are handled by the governments.
The initiative is understood by industry sources as a retaliatory measure against the’s decision in July not to extend the latest deadline for to meet the minimum membership requirement and to discontinue the membership application process. Lufthansa also has been unsuccessfully trying to get approval for services into India.
In addition, the Indian government appears to be taking a much tougher attitude toward access for foreign carriers as a result of Air India’s financial troubles in general.
The Ministry writes that “in order for the Swiss International Air Lines operations to continue, they would require to meet the SOEC clause. It is therefore requested that the action taken to fulfil the legal requirement may be communicated to this Ministry urgently failing which, [Swiss] will no longer be entitled to operate the agreed services between India and Switzerland.”
Swiss and Austrian both fly to Delhi and Mumbai from Zurich and Vienna, respectively. According to traditional bilateral agreements, foreign airline ownership is limited to 49%, unless the treaties have been renegotiated.