Government of India grounds FlyDubai’s India plans

Under pressure from domestic carriers it appears that the Government has grounded the India plans of FlyDubai, the low-cost airline floated by the Al-Maktoum royal family of Dubai.

The airline had sought permission for flights to Chandigarh, Coimbatore and Lucknow with tourist destinations like Goa to be added later.

Obviously this has made the Ministry of Civil Aviation re-think it’s recent generosity under bi-lateral agreements with the United Arab Emirates (UAE). Emirates airline has utilised this generosity to the hilt and has increased it’s presence in India on a massive scale which has hit all airlines operating in India, domestic and foreign, hard, but particularly the national carrier Air India.

The middle east and gulf sectors are extremely profitable for all domestic carriers. With FlyDubai offering ridiculously low fares of Rs 4,700, including taxes, on the Dubai-Lucknow sector, the yet profitable low cost operation Air India Express would be hit hard.

As per officials, none of the initial destinations sought by FlyDubai figured in the existing ‘points of call’ in the Memorandum of Understanding signed between India and UAE last year, but the three cities — Chandigarh, Coimbatore and Lucknow — were part of ‘note verbale’ exchange and had to be agreed later as additional points of call.

The sticking point is on the agreement that these new points of call were to be with the existing overall existing seat entitlements for UAE carriers in India, and not additional capacities, a technique traditionally used by foreign carrier to pry out additional capacity entitlements. UAE carriers Emirates, Etihad and Air Arabia already have a massive entitlement of 54,200 seats per week to ten Indian destinations currently.

The civil aviation ministry is going very slow on further negotiations of seat entitlements with foreign countries as it has come under fire for compromising interest of not just Air India, but all domestic carriers, while signing bilateral air service agreements.

With the Indian aviation industry expected to contribute 30% of global airline losses with only 2% of global traffic, the ministry’s counter that the government must take decisions favouring travellers and not keeping in mind particular airlines is not finding favour given the recent strike call by private airlines and massive bail out request by Air India.

One has to wonder want FlyDubai intends to do with it’s planned procurement of 68 Boeing 737-800s – many of which were destined to be used on the India routes.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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