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Mid-year Economic Survey lists factors for India’s lower international air traffic share

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Large increase in capacity entitlements under bilateral Air Service Agreements and under utilisation of own entitlements are responsible for India’s lower share in international air traffic, the Economic Survey II said. The Air Service Agreements (ASA) provide the right of home and foreign country airlines to fly people between them. These rights are reciprocal by nature. “Round tripping of passengers via international hubs of Dubai and Singapore, utilisation of the sixth freedom of the air and increase in capacity entitlements under bilateral ASAs have been cited as reasons for low share of Indian airlines in India-origin international traffic.

The sixth freedom of air allows overseas airlines to fly from a foreign country to another while stopping in one’s own country. “The sixth freedom has to a large extent been responsible for reducing the share of direct long-haul flights for Indian carriers from 25 per cent in 2011-12 to 20.5 per cent in 2015-16,” the survey, tabled in Parliament, said. According to the survey, large increase in capacity entitlements under ASA and under utilisation of India’s own entitlements are responsible for the country’s lower share in international traffic to a large extent. India is one of the fast growing aviation markets.

Suggesting policy prescriptions, it said the government may consider identifying major cities as aviation hubs since India is as advantageously placed in terms of geographic location as Dubai or Singapore. There is also a need to reconsider the 0/20 rule so as to allow private airlines to fly abroad. “In return, private airlines can be mandated to fly to under-served airports in tier 2 and tier 3 cities in order to have greater regional connectivity,” the survey added.