Fly Dubai's India to Middle East service meets opposition

UAE low-cost carrier Fly Dubai's delayed launch of its service connecting smaller Indian cities with the Middle East was due - according to a report in the Indian Express - to strong lobbying by Indian carriers and opposition by India's political parties.

Plans for the United Arab Emirates government’s low-cost carrier Fly Dubai to connect smaller cities in India with West Asian (Middle East) nations at rock-bottom fares may be facing some problems.

Just three days ahead of its inaugural flight from Lucknow to Dubai, the low-cost carrier had to announce a ‘delay’ in its operations on 10 July. Fly Dubai’s plans ran into rough weather with many members of Parliament raising questions over access accorded to foreign airlines under Bilateral Air Services Agreements in the last 10 years. The airline was originally given permission by India's Ministry of Civil Aviation to fly from six destinations in India.

West Asian routes are lucrative for airlines flying from India. Incumbents such as Jet Airways, Air India and Kingfisher Airlines have a significant chunk of the market share in this segment. Competition, especially during times when the industry is going through a downturn, would have directly hit their income and profitability. They too put up stiff resistance to Fly Dubai’s plans, said a government official who did not wish to be quoted.

Speaking on condition of anonymity, the government offcial said: “It was feared that Fly Dubai, with its low-cost pricing and additional points of calls like Chandigarh, Coimbatore, Jaipur and Lucknow, would have mopped up a large part of the domestic traffic from India on these routes.”

On 10 July, Fly Dubai cited operational reasons for ‘delaying’ its India launch. It is uncertain when operations will commence, said an industry source.

Kapil Kaul, CEO of the Centre for Asia Pacific Aviation, told the Indian Express that the carrier had booked full flights for its inaugural service from the three cities of Lucknow, Coimbatore and Chandigarh. The one-way fare to Dubai was attractively priced at around Rs 4,500 (US$94) on an Airbus 767-800, with a maximum capacity of 189 in an all-economy class configuration.

In August, the Empowered Group of Ministers even planned to review the Bilateral Air Services Agreements signed in the last 10-15 years, says Congress MP Sanjay Nirupam. He said: “It was decided to review bilaterals as foreign carriers can’t be allowed to retain privileges if they are not using it.”

The bilateral air services agreement of May 2007 signed between the two nations allowed each side a weekly seating capacity of 29,100 in each direction. According to the agreement, UAE’s carriers had nine points of calls in the country which are Delhi, Mumbai, Chennai, Kolkata, Kochi, Hyderabad, Thiruvananthapuram, Bangalore and Hyderabad. With sanction of these four smaller cities, the total number of points of call in India had risen to 13.

Earlier, the Ministry had turned down the UAE government’s request for additional capacity from Mumbai, Bangalore, Hyderabad, Amritsar, Trichy and Mangalore.
According to aviation industry experts, there has been 70% capacity increase from West Asian nations. With the opening of smaller metro towns to international carriers, there may be an adverse effect on not only the airlines but also on the Delhi and Mumbai airports, said Kaul.

Kaul said: “While India still follows a negative regulation for international routes for its own airlines, it is granting more points of call to international airlines on smaller Indian cities. This will enable Indians to fly to Dubai and from there they can go on to fly on the global network of an airline like Emirates, depriving Indian carriers a chance to fly them. UAE allows Indian carriers only three cities of Sharjah, Dubai and Abu Dhabi as points of call.” He added that it may even affect the recovery process of Air India, which operates Air India Express, a low-cost carrier on the Middle-eastern sector and other neighbouring countries.