India’s Open Sky Policy: A Major Bone of Contention

Open Sky Policy

The recent changes made to India’s Open Sky Policy have taken the aviation sector by storm. Deemed to be a move that will provide a level playing field to Indian airlines, the policy and the recent changes have been able to grab the eyeballs of Indian and foreign carriers equally. We take a look at the much-discussed Open Sky Policy and the changes that await India’s aviation industry by reaching out to the veteran industry experts to understand the consequence of the move along with its impact on the air cargo industry.

The Directorate General of Civil Aviation (DGCA) has recently made changes to the India’s Open Sky Policy by limiting non-scheduled and ad hoc cargo flights by foreign carriers to six airports.

The change in country’s policy was made following a government review and it is primed to promote India’s airfreight carriers.

“The changes have been made with a view to ensure fair and equal opportunity in the air cargo capacity offered by Indian registered airlines and airlines registered elsewhere,” a circular from the Ministry of Civil Aviation read.

Open Sky Agreements are bilateral agreements that the two countries negotiate to provide rights for airlines to offer international passenger and cargo services.

As per the revised policy, the operation of foreign ad hoc and pure non-scheduled freighter charter service flights have been restricted to operate at six airports; Bengaluru, Chennai, Delhi, Kolkata, Hyderabad and Mumbai.

Ensuring a Fair Game

How will this move made by the DGCA ensure fair and equal opportunity in the air cargo capacity offered by Indian registered airlines and airlines registered elsewhere?

The amendment brings to the fore questions whether the move will ensure a fair chance in the air cargo capacity offered by Indian registered airlines and airlines elsewhere.

Dr Renu Singh Parmar, Former Senior Economic Advisor, Ministry of Civil Aviation is of the opinion that smaller airports will be the ones most affected.

“As far as our airlines are concerned especially Air India and SpiceJet, this is a move to ensure that cargo is lifted mainly through Indian airlines at all airports. However, the smaller airports will have to take the brunt of this order as hitherto there had been a number of non-scheduled flights carrying COVID- related supplies to various airports such as Cochin, Trivandrum, etc. Non-scheduled operators can still fly to the other airports if they wish, but case by case permission will have to be taken from the DGCA.”

~Dr Renu Singh Parmar, Former Senior Economic Advisor, Ministry of Civil Aviation

Foreign Carriers will be permitted to operate ad-hoc / non-scheduled Freighter limiting operations to six Indian Airports only, subject to approval.

Keki Patel, Retired Senior Aviation Executive says, “In my reading, the new changes made to the Cargo Open Skies Policy will be applicable to foreign freighter operators only.”

“GOI is promoting Make-In-India for exports; these exports may not necessarily be scheduled exports. Secondly, GOI wants manufacturing for exports and domestic markets to be spread across all states and not be concentrated over a region or state. To support such manufacturing exports, the list of available airports must not be restrictive.”

Tushar Jani, Group Chairman, Cargo Service Centre (CSC) provides us a clear picture of why the move is important given the current scheme of events.

“During the COVID crisis, Indian carriers ramped up their cargo capacity, by converting passenger aircraft into cargo freighters. Earlier, when the Open sky Policy was there, Indian airlines did not have any capacity to uplift. But now, given the situation where they have significantly ramped up their capacities, any government would do what the Indian government is doing.”

~Tushar Jani, Group Chairman, Cargo Service Centre

Providing a Level Playing Field

The decision to restrict foreign carriers’ non-scheduled cargo flights to major cities in the country was taken to provide a level playing field to domestic airlines at a time when COVID-19 significantly impacted the aviation sector.

The civil aviation minister had earlier commented, “For providing a level playing field for Indian air cargo operators in these Covid affected times, some changes have been made in the open sky policy for cargo.”

He said non-scheduled cargo flight operations by foreign carriers to and from India are now “restricted to Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad” while Indian carriers can still mount non-scheduled cargo flights from any point in the country.

Foreign carriers carry around 90 per cent of the total international cargo to and from India.

Narendra Wadhwa, Executive Director, Pelican Air Private Limited highlights an important point while comparing the capabilities and future potential of Indian airlines with respect to foreign carriers.

“It is not only the Indian carriers’ ability to carry cargo from, say, Chennai to London, but also their network capability to go beyond London. How many destinations can be added to their network to service cargo is the question that needs to be asked”, he says.

“If you do a like-for-like comparison, do the Indian carriers have the capability to fly to South America? No. Who will take advantage of it? It is the foreign carriers. Even before the Open Sky Policy, it was the foreign carriers that were carrying most of the share of the air cargo.”

~Narendra Wadhwa, Executive Director, Pelican Air Private Limited

“You should look at the capacity that they already have to service that cargo”, he sums up.

Can this move provide a level playing field for Indian carriers?

“I have my doubts”, says Mr Wadhwa.

Trouble brimming in the South

Despite having four international airports within a vicinity of 580 kms with Cochin being the fifth revenue making airport in the country, Kerala was not included in the list of the 6 airports. While responding to apex body ACAAI’s ( Air Cargo Agents Association of India) plea, the Centre said that the decision was taken to protect the national carriers. However, K Suresh Kumar, Chairman of ACAAI (Kerala) lays out the consequences that the policy has had on the state, especially in the export of perishables and why it should be considered as a special case.

Due to unavailability of direct flights from Kerala to Europe, there has been a major impact on the perishables and the present alternatives are only leading to insurmountable logistics costs, as Mr Kumar shares.

“We are dealing with perishables, marine products etc that have a particular shelf life: they have to reach the destination at the earliest. We have been using the capacities of Emirates and Qatar Airways- they have a very good network, good connectivity via Dubai or via Doha, so in 14 hours our product will reach Europe’s market. But this is not possible at the moment, since the recent amendment directs that we take our cargo either to Bangalore or to Chennai. So, if we transport to Chennai via trucks, it will itself take 14 hours. So consequently, our logistics costs will go up, our clients won’t be able to deliver the products on time, so for perishables, this move will not work.”

~K Suresh Kumar, Chairman of ACAAI(Kerala)

Nosedive in Demand and Foreign Exchange:

Mr Kumar further sheds light on the impact of the change in policy on the livelihoods of the people and the economy.

“We are struggling now; our demand was 1000 tonnes in a week, from both Cochin and Trivandrum, whereas now, we are only able to export only 250 tonnes. So, loss of 750 tonnes in a week means a loss of almost 3000 tonnes in a month that the government is losing on forex. The people over here are losing their employment. So they don’t realise the cascading effect of this notification, something they are still holding on to. If the government gives us an alternative, say, by putting AirIndia into service, then we will wholeheartedly support this move. But right now, they are protecting something which is not there. We want our carriers to survive”, he shares.

This is an abridged version of the original story that appeared on the cover of the November issue of the Logistics Insider magazine. For the complete unedited cover story, click here.

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