The Enforcement Directorate has alleged that a substantial jump in seat entitlements and Indian points-of-call (airports) for the operation of foreign airlines, due to bilateral agreements struck with the United Arab Emirates (UAE) and Qatar between 2005 and 2009, resulted in huge losses to the national carriers.
Being a signatory to the Convention of Civil Aviation, India has to comply with its principles. As part of the arrangement, two countries hold talks to decide routes and allocation/increase of seats on the basis of equality and reciprocity.
Under these agreements, traffic rights and capacity entitlements are exchanged based on market requirements. They specify the entitlements in terms of frequency of operations, number of seats and airport.
Between 2005 and 2009, India held bilateral meetings with the UAE and Qatar.
Substantial increase
After each meeting, the ED alleges, a substantial increase in seat entitlements and airports was made, from which the airlines of both the countries allegedly gained more than the Indian carrier. In case of the UAE, the agreements were held separately for Dubai, Sharjah, Abu Dhabi and Ras-al-Khaima.
According to the data quoted by the agency, under the agreement with respect to Dubai, seat entitlements for the Emirates were 8,400 up to 2001. However, after three agreements in 2005, 2007 and 2008, they went up to 54,200. “Finally, the seats were increased to 54,200 and points of call to 10 during the meeting held on April 23, 2008,” the ED says.
As part of the Sharjah agreement, the seat entitlements — that was 4,536 till April 2006 — jumped to 17,841 in June 2008. As for Qatar, the number rose from 1,288 in June 2002 to 24,292 in February 2009.
Under the agreement dated June 9, 2008, the points of call stood at eight, says the ED.
“Every time [agreements during the check period] the foreign carriers obtained more points of call, which resulted in the loss to the Indian carrier as India got only one….the foreign airlines were exercising the benefit of 6th freedom traffic. It means they are carrying the traffic of the countries other than their own,” says the agency.
The ED probe revealed that both Air India and the erstwhile Indian Airlines were of the firm view that traffic rights on these routes should not be enhanced as the existing ones were sufficient to take care of the requirement for to-and-fro traffic. They had also highlighted the “undue advantage flows” to the foreign carriers as the national carriers were unable to take benefit of the “sixth freedom” traffic right.
Despite these reservations, the foreign airlines allegedly managed to get more allocations.
The ED, in its chargesheet against lobbyist Deepak Talwar, alleges that in lieu of the favourable traffic rights, the beneficiary airlines made huge payments to him through various routes.
