Jet Airways may get nod for Gulf flights

Jet Airways may get permission to start flying to Gulf next year. This follows a review of the policy to reserve flights to the Gulf for Air-India and Indian. Gulf-based carriers have been expanding in India, and there is a view that the two public sector carriers are not matching this with additional capacity. Jet’s operations on these high-turnover sectors are likely to impact margins of A-I and Indian. The government had promised these airlines a five-year exclusivity to Gulf, when international operations were permitted for Jet and Sahara. However, there was no written commitment to the effect. Air Sahara is also likely to get the nod, but it is not clear if it will jump join the fray since it is still recovering from the failed merger with Jet. Jet is likely to start flying to Gulf cities during ’07. Air-India, Indian and Air India Express currently control over 50% of the India-Gulf traffic. In the other direction, the market is carved up between Gulf Air, Emirates, Qatar Airways, Etihad and Air Arabia. The India-Gulf routes cross-subsidise losses on other domestic operations for Indian. Air-India too makes higher cash margins on the Gulf routes than on the longer haul sectors.

Civil aviation minister Praful Patel said “The aviation industry is witnessing dynamic changes globally. We need to respond to these changes.” Officials said a review of aviation policy would begin in January. The idea of allowing private airlines to fly overseas was to enable strong Indian competition to foreign carriers, they added. The situation has changed since the time Gulf was reserved for government-owned carriers, they explained. The government’s rethink is partially due to the decision to merge the two PSU airlines. Post-merger, the government expects to see a strong carrier capable of meeting global competition and this may obliviate the need to provide support in terms of exclusivity to the Gulf market. Originally, the Gulf was to be the exclusive preserve of A-I and Indian till ’08. Then, the government looked at extending this till ’10, since fleet acquisition by the two carriers got delayed. The current proposal indicates that the entire policy scenario seems to be going through a major churn. Entry into the Gulf market will be a booster for Jet, which is preparing for flights to the US next summer.

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