UK-India air traffic has doubled since 2004

There has been a doubling of the number of people traveling by air between India and the United Kingdom due to the liberalising of norms for travel between the two countries, according to an official study. Since 2004, the number of passengers has grown from one million to just over two million for the 12 months up to July 2006, the study carried out by Civil Aviation Authority (CAA), Britain's specialist aviation regulator, said. The rise is due to the greater choice and capacity available, combined with cheaper fares, it added. Between October 2004 and October 2006, the number of direct services between India and the UK more than tripled from 34 to 112 services per week, provided by a combination of pre-existing carriers offering more flights and the arrival of new carriers in the market. As a result of liberalisation, India has moved from seventh to fourth most popular long-haul destination after the US, Canada and the United Arab Emirates, the CAA study said.

The CAA report found that the benefits have been wide-ranging, with UK consumers, airports and the wider economy all benefiting significantly from the opening up of the market. While the focus of airlines' expansion plans has been on London-Mumbai, other city pair routes such as London-Delhi and London-Bangalore have also been introduced. Consumers in particular have benefited from more frequent services to a wider range of destinations in India, with increased competition and capacity leading to substantial reductions in fares for both leisure and business passengers. The report estimated that these changes amounted to benefits equivalent to £39 million for UK resident passengers in 2005, with total consumer benefits likely to be much higher were the impact on foreign passengers also taken into account. There has also been a big increase in leisure travel, particularly travel from the UK to India, and, as a result of the overall increase in traffic, UK airports are gaining more revenue from landing charges and consumer expenditure at airports.

The vast majority of new services have been concentrated on Heathrow, with Birmingham the only regional airport benefiting from new direct services. Since liberalisation, the number of direct city pair routes has increased from five to eight, and it is anticipated that further new direct city pair routes will be opened up over coming years. The only group to have been negatively affected are those airlines already serving India from the UK, either directly or indirectly, where previously lucrative profit levels have been reduced as a result of the enhanced competition in the market. However, the increased greater commercial freedom for airlines to operate direct services, combined with the new opportunities created for growth in these markets, has led to a surge in revenues and UK and Indian carriers are now regaining market share from indirect carriers, the report said. The CAA's Group Director (Economic Regulation), Harry Bush said: 'The clear and significant benefits set out in this report have come about because Governments on both sides have looked beyond the narrow interests of their flag-carriers when deciding what is in the national interest, and set policy on the basis of the bigger picture.

'The findings of this report validate their approach. We see more competition, lower fares and greater route choice driving growth in trade and tourism, helping strengthen the already close ties between the UK and India. There is no reason why benefits of this sort cannot be generated by similar liberalisation in other countries'. In late 2004 and early 2005, UK and India agreed to a phased liberalisation of their aviation relations that included the loosening of restrictions on the number of services that could be operated between the two countries, and substantial reform of other aspects of the regulatory arrangements. Prior to these agreements, traffic rights between the two countries were tightly capped at 16 services for each side to be allocated as desired by the countries concerned, with the addition of 3 services per week (spw) to Kolkata for each side agreed extra-bilaterally. Of the 38 services allowed to both sides, British Airways operated 19, Virgin Atlantic 3 and Air India 13.

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