Willie Walsh
| Photo Credit: IATA website
India’s refusal to revise bilateral seat allocations for international flights despite demands from several countries reflects an “old protectionist India” that could result in others retaliating and restricting access for Indian airlines which in turn will hamper India’s ambition to develop a global airport hub, warns the Director General of global airlines body IATA, Willie Walsh.
“With the ambition to expand will come the need to allow more competition into India but you are not going to get the response from other countries if you have a restricted bilateral. Other countries will restrict capacity as well,” Mr. Walsh told The Hindu in an exclusive interview at the IATA’s headquarters in Geneva.
The International Air Transport Association (IATA) represents 300 airlines globally. Mr. Walsh’s comments come at a time airlines such as Emirates, and Turkish Airlines have demanded a revision of bilateral rights. Emirates CEO Tim Clarke said recently that India’s refusal to allow Gulf carriers more flights into India could result in losses of “$800 to $900 million” for Indian airlines who too would be deprived of reciprocal rights. Minister for Civil Aviation Jyotiraditya Scindia has ruled out a revision of bilateral seat allocations.
Mr. Walsh said that the demand from various airlines such as Emirates and Qatar for additional seats or flights within the bilateral agreements were due to “demand for air travel significantly outstripping the services available,” and therefore the ultimate loser will be the consumers who are forced to pay higher airfares because of fewer flights.
Mr. Walsh rued that the government’s policy reflected “old protectionist India” which didn’t have a national airline that was capable of competing at a global scale.
“Going forward people should be more ambitious and confident and believe that Air India is capable of competing on a level playing field,” he said. He said that the potential for growth in India was massive and that though its domestic market was at third place after US and China, it only accounted for 2% of global revenue passenger kilometres [the number of revenue passengers multiplied by the total distance traveled], while in China it was 9.8% of global RPKs.
Old protectionist policies will lead to higher airfares in India: IATA DG Willie Walsh
In an exclusive interview with Jagriti Chandra at IATA’s Headquarters in Geneva, its DG Wille Walsh says India’s decision to not respond to demands for revising bilateral seat allocations could result in other countries responding with restrictions for Indian airlines. He also speaks about challenges pertaining to pilot shortages as well as the new confidence in the Indian aviation market following the massive Air India aircraft order.
With Air India bringing four different airlines under the same brand, what should the Indian aviation sector and consumers brace for?
I think this is a very positive development. If I go back to my former career as an airline CEO I was very positive about consolidation. When I have been asked questions about India in my past career I always pointed to the fact that a struggling and a bankrupt Air India was a major drag on the industry in India because to a large degree what we were witnessing were policy decisions taken with Air India in mind. I don’t think that was most necessarily a positive outcome for India as a country. I think the acquisition of Air India by Tata has been a very positive development. The creation of the joint venture with Singapore Airlines is a very positive development and the order that Air India made [of 470 aircraft] is an evidence of that. The Singapore Airlines investment shows a great confidence in what is going to happen at the new Air India. This should give the country and the government greater confidence that India is capable of competing on the global stage on an equal basis with other airlines around the world. Going forward we will see greater confidence in the industry in India.
India aspires to develop a global airport hub, and also become a manufacturing hub. But what must it get right first?
Having a global airline is one thing and operating one at an efficient global hub airport is another. You have to have both the airport and airline functioning well. You have to ensure you have the right infrastructure in place and the airline will have to have the right network in place, which are not just the hub airport but also all the spoke airports in which they will operate. The network that they will want to develop will in itself be a challenge as you will have to acquire slots in all the airports you want to fly to. This includes expanding network internationally when most of the international hub airports are busy. Air India has slots at most of these, but I would imagine that the ambition goes beyond the network Air India used to operate. But you have to have the right people in place, which is challenging particularly in the current environment in the industry. Recruiting and retaining talent is a difficult thing to do. But ramping up the operations at the scale that India is looking at will require a lot of investments in training facilities, recruiting the right personnel with the right skill and doing that in a way that allows the airline to expand in a safe environment. A lot of challenges, but also very exciting times. And the potential for recruitment and investment in other areas of aviation has to be exciting as well.
Do you think the present government’s policy of restricting bilateral rights and thereby access of foreign airlines to India is beneficial for the traveling public and Indian airlines?
The issue at the moment is that Indian consumers suffer. When you get airlines like Emirates and Qatar looking at additional services, that is because there is a huge demand and most of that demand is not being filled. So, most often what you see is the demand for services significantly outstripping the services that are available. I think that reflects an old protectionist India, which didn’t have a national airline such as Air India capable of competing at a global scale. They will have to recognise that with the ambition to expand comes the need to allow more competition into India because you are not going to get the response from other countries if you have a restricted bilateral. Other countries will restrict capacity as well.
The policies that I have seen Indian government apply were appropriate for what used to happen, but going forward people should be more ambitious and confident and believe that Air India is capable of competing on a level-playing field and shouldn’t be worried about protectionism. I think there are great opportuntiies for India. If you look at the domestic market, the potential is huge. But no doubt that consumers will suffer.
India is also staring at a scramble for pilots. What must be done to address this acute shortfall?
There are shortages in certain parts of the world, but this is not a global problem. In Europe there is no shortage and there are many pilots who are looking for jobs and the industry is still recovering. Yes, we have lost some who may have retired or retired early, who may be attracted back. There is no surplus of pilots, but there isn’t a global shortage. The US, where a shortage exists, has a particular problem because of the specific requirements for minimum flying hours which are not there in other parts of the world.
But India will need a lot more pilots than it has, and airlines will have to see whether they recruit pilots within India or expatriate pilots or a combination of both. But I suspect it will be a combination of both. I don’t see that the supply chain for pilots is sufficiently strong in India to enable Indian airlines to fulfil all of the requirements from the Indian market.
You will see independent training institutes in many parts of the world treating India as an opportunity for developing pilot training schools in the country. Air India itself will invest in training facilities to ensure they have the right resources internally to ensure they have sufficient pilots. This is going to be a big challenge because training pilots from scratch takes time, and training those who are qualified and bringing them in takes time. When I did my pilot training many years ago, from the start to training as a co-pilot took about 18 months. There is a long lead time assuming you can do everything in an efficient manner. You are looking at a training period of 18-24 months for ab initio pilots. But there are also a lot of qualified pilots in other parts of the world who very well maybe looking to return home as opportunities exist in Air India and other domestic airlines. But that clearly means that Air India will have to compete on salary levels with other airlines around the world.
What are IATA’s concerns with respect to India?
The main concern we have is that it is over-regulated without sufficient regulators in place. So, it is the worst combination you could get. A lot of unnecessary regulations and insufficient infrastructure to support the regulation. It is high cost- we still have issues with state taxes on fuel which don’t exist in many other parts of the world and all of these play against the consumer. It just means that consumers are paying higher than they would have been paying had there been a more sensible regulation. There is scope for significant de-regulation in India, which would benefit Indian consumers because it would improve the efficiency of airports and airlines and reduce the cost of operating, which ultimately gets passed down to the consumer in the form of lower ticket prices. There is scope for a fundamental review of regulations in India.
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