The Hindu : International / India & World : ``Open skies policy will make outsourcing easier''

Online edition of India's National Newspaper
Sunday, Apr 10, 2005

International

International - India & World

``Open skies policy will make outsourcing easier''

WASHINGTON, APRIL 9. A deal between the United States and India could make it easier to travel between the two countries and outsource jobs.

The "open-skies'' agreement, slated to be signed by the U.S. Transportation Secretary, Norman Mineta, and Indian leaders later this month, would strike down decades-old restrictions on air travel and fares between the two countries. Current rules limit airlines in either country to serving a maximum of five destinations in the other nation and require airlines to submit proposed fares to authorities for approval before initiating service.

The end of those restrictions is expected to bring lower fares and more flights between the countries as airlines rush to add service. Continental Airlines said this week that it planned to start service between Newark and New Delhi in October, making it the first airline with a non-stop flight between the two cities.

A Delta Airlines spokeswoman said it planned a new service to Chennai from New York via Paris in May, and Northwest Airlines had applied for permission to fly between Minneapolis and Bangalore via Amsterdam. If the Transportation Department approved, the flights would start in October. There were no direct flights to India from Boston.

Competition

"The open-skies agreement creates a more competitive marketplace for the airline industry,'' said Continental spokesman Martin DeLeon.

Already, some local companies are anticipating the availability of cheaper and more frequent flights to India to make it more convenient to shuttle workers and executives back and forth.

"We need market forces to take over,'' said Marc Hebert, president of Sierra Atlantic, a software company headquartered in Boston and Silicon Valley that has most of its employees working in India.

Despite current restrictions, travel between the U.S. and India grew 86.1 per cent to 5,20,827 in 2004, from 2,79,921 passengers in 2000, according to the Bureau of Transportation Statistics. The number of passengers flying between the two countries grew 29.6 per cent between 2003 and 2004 alone.

That growth follows the trend of U.S. companies increasingly outsourcing jobs to India and other nations. Forrester Research Inc. estimates that 1.2 million U.S. jobs will be sent offshore by 2008, up from 3,15,000 in 2003.

U.S. airlines can now only fly to New Delhi, Mumbai, Chennai, Kolkata and Bangalore from the U.S. while Indian carriers can only fly to New York, Chicago, and Los Angeles. That's a problem for Sierra Atlantic, which develops and supports software for larger companies such as Oracle and spends more than $1 million a year on airfare to bring its employees from its office in Hyderabad to the U.S.

An average jaunt between Hebert's office in Fremont, California, to Hyderabad takes more than a day. First, there's the 18-hour flight from San Francisco to Singapore, punctuated by a layover in either Hong Kong, Tokyo, Taipei, or Seoul. Once in Singapore, there's a six-hour layover.

"Now you're 24 hours into the trip and you're not in India yet,'' he said. "If you're not lucky, you've got to go into Chennai and then another hour flight into Hyderabad.''

Caution

Some aviation specialists said they view the agreement as a benefit to travellers but cautioned that the sea change many are looking for could take years to materialise.

Bringing down the political barriers may prove a lot easier than maintaining and filling huge jets for 20-hour trans-Atlantic flights, said Dan Kasper, head of the aviation practice at LEGC LLC, a Cambridge consulting firm.

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