Beijing sends proposal for Chinese airlines' foray into Indian skies

Chinese airlines are planning a massive expansion in Indian skies, with the relationship between the two nations showing signs of improvement.

 

Beijing sent an official proposal to double seat allotment for its carriers, and New Delhi has responded favourably, Business Standard has learnt. The two sides are likely to meet for bilateral talks in the first week of June. If approved, this will be the first time since 2008 that the two countries will rewrite their air service agreement.

 

The seats are likely to be granted under a new formula developed for giving flying rights to countries where Indian carriers have utilised less than 33 per cent of their permitted capacity. Under the rule, in such sectors, the Indian government will allow an increase of seats equal to average growth in the last three years.

 

Under the current agreement, both the countries are allowed to have 42 flights in a week. Chinese airlines with their aggressive growth plan have already utilised their full quota, with three mainland airlines having services to Delhi, Mumbai and Kolkata.

 

The ambition of Chinese airlines prompted the issue to be raised during Prime Minister Narendra Modi’s recent visit to Wuhan for a meeting with Chinese President Xi Jinping.

 

A lengthy period of frosty relationship between India and China has limited travel demand between the two countries despite both being the powerhouses of economic growth. Indian carriers have not explored the Chinese market; only Air India flies to Shanghai.

 

The situation is likely to change with Indian carriers planning to deploy long-range narrow bodies in their fleet. While IndiGo will opt for Airbus A321 LR, SpiceJet will deploy Boeing 737 Max from August.

 

“The economics of the long-range fleet will change the game as they are perfectly fit for the sweet spot of five to six hours’ range,” said an IndiGo executive. Sources said SpiceJet was eyeing flights to Beijing and Guangzhou with 737 Max.

 

“An expansion of services between China and India is a very positive news for the travel industry of both the countries. The out-bound travel market of China is huge…I believe there should be an open sky between India and China now that the leadership has cooled down the atmosphere,” said Subhash Goyal, chairman of STIC Travel, which is the GSA agent for Air China in India.

 

However, experts highlight that behind an India expansion strategy is also China’s aspiration for supremacy in global trade and international relations.

 

Part of China’s One Belt One Road policy, which envisages expanding its reach in the global trade, is to develop aviation hubs at Beijing, Guangzhou, and Shanghai.  Even smaller cities like Kunming and Chengdu are being developed as regional hubs. India, the third-largest aviation market, is a crucial element in that plan.

 

“Chinese airlines are able to provide dirt-cheap fares primarily due to the heavy subsidy they get from their government. Watch out in some years, China is going to rival the existing global hubs,” said an executive of an Indian airline. However, he pointed out that besides competitive fares, Chinese airport hubs would have to increase efficiency in terms of food and language.

 

“Gulf carriers, with their high standard of hospitability and on-board Indian cuisine, have gained a stronghold. China has to rival that to win over Indian transit passengers,” he said.


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