India should revisit open skies policy and allow operations to more cities: Adel Ali, Air Arabia CEO
"We will stand to gain only if the open skies policy is revisited and we are allowed to operate to more cities", Adel Ali, Air Arabia CEO said.
HYDERABAD: Adel Ali, group chief executive of Sharjah-based low-cost airline Air Arabia, says the Indian government needs to revisit its open skies policy and allow foreign carriers to operate to more Indian cities. While welcoming the foreign direct investment into Indian aviation, he told ET that Air Arabia will not rush into any decision. Edited excerpts:
With the Indian government opening up the doors for foreign direct investment in the country, will Air Arabia be interested in picking up any stake in Indian airlines?
This move by the Indian government is very good for the private airlines and offers an opportunity for foreign carriers to invest in India. As far as Air Arabia is concerned, we're constantly looking at opportunities across different regions we operate in. However, we would not rush into a decision. We want to be sure that this opportunity benefits us as much as it benefits the Indian airlines.
While it is taken for certain that cash-starved Indian airlines will gain from the equity participation, what are the biggest gains for foreign carriers?
For us, the benefits are access to a larger chunk of the flying population and reduced operating costs. But we will stand to gain only if the open skies policy is revisited and we are allowed to operate to more cities in India. Currently, the bilateral agreement between India and the UAE restricts each foreign carrier to a fixed number of routes alone.
Would the airline look at entering into any new code sharing agreements with any Indian carriers?
Code sharing now is a thing of the past. Earlier, many airlines used to engage in such an arrangement to protect their market share. But now, this arrangement will not be really valid as airlines are considering different routes depending on their operability and not just because X airline is operating to a certain destination.
The LCC phenomenon in the Middle East for Air Arabia is waning in its home ground for the first time since it began in 2003. With growth not being as high as envisaged, what are the other markets that the airline is exploring?
I agree, the growth has not been as high it is for South-East Asian LCCs. The South East Asian LCCs are 35 years old, the European ones are 25 years old compared to the Middle East low cost carriers. This is because skies are not open to most LCCs for expansion. In the last two-three years, we have been growing in the Indian sub-continent and African countries because of favourable political policies. We would expect these regions to do well for us in the long run too.
With Etihad and Emirates abandoning a lot of long haul routes, Indian carriers are sniffing an opportunity. How would you receive competition from the Indian carriers?
If Indian carriers come into the fray, it will beneficial for the customer completely. We welcome competition from the Indian airlines. Even if the routes are abandoned by the Middle Eastern carriers, it is my view that others will enter only if it is profitable for them.
What is the expected rate of growth from India in the next two years? Are all routes in India profitable?
At the moment, there is zero growth unfortunately. Growth can come by only if we are allowed to expand and fly to other destinations. The bilateral agreement doesn't allow it now. We have made our representation to the UAE to revisit the agreement. Regarding profitability, not all routes are profitable. The airport charges in India are prohibitive, but we will continue operating all routes as long as it is contributes to our business.
The state government of Kerala has announced that it will introduce a new airline to the Gulf region. Don't you think there is overcrowding of airlines operating to destinations in the Gulf market?
Everybody has a right to enter the business, but in my personal opinion, air travel is a private business. It has to be profitable. The Middle East market is a four-fold opportunity than it is now. I cannot say that the entry of one other airline will damage the rest.