More rights for foreign airlines: who will fly high?

livemint.com:

Mint explains their working, the impact on airlines and passengers. Bilateral rights are granted under air service agreements between two countries. They are a set of commercial aviation rights granting an airline the right to enter another country’s airspace.

The rights cover the frequency of flights, number of seats mounted by carriers from either side and the type of aircraft. These bilateral air service agreements also mention the exact Indian airport or city from which a foreign airline can operate. Currently, India has bilateral air service agreements with 116 countries.

The last major increase in rights, on a busy route such as India-Dubai, was agreed in 2015. Since 2016, India has been wary of enhancing bilateral entitlements (more seats, flights, airports etc.) as foreign airlines have been able to better utilize their share of bilateral rights. Indian airlines weren’t able to fully exploit entitlements as they are saddled with older fleet and fewer wide-body planes (suited for international flights).

The broader policy of the government has been to wait for global aviation hubs to be set up in India and make domestic airlines utilize their rights effectively. This was especially the case when it came to agreements with Dubai, Bahrain and other countries in West Asia. The domestic air travel penetration rate is only 4-5%, implying runway for growth.

Foreign airlines see this as an opportunity. Also, Indian travellers are ditching domestic travel for short- to medium-haul foreign destinations. As a result, Emirates, Etihad and Saudia have been at the forefront of demanding an enhancement of their bilateral agreements.