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Really opening up the skies

THE INDIA-U.S. Civil Aviation Agreement marks another bold step in the open skies policy being pursued by the Government of India. That it replaces a 50-year-old agreement between the two countries is a commentary on the low level of interest in the past and the fairly recent emergence of India as a key economic and tourist destination. Although a couple of American airlines have already announced plans to connect with Indian cities in their summer or winter schedules, the new aviation pact clearly moves the relationship to another level and enables the airlines of both countries to look at new destinations and also to operate to third countries. What Civil Aviation Minister Praful Patel and Transportation Secretary Norman Y. Mineta settled on Thursday opens the skies to existing airlines and will let India's private carriers fly out to the U.S. at least by 2006. The agreement removes the caps on the number of flights and enables connections to new cities.

American airlines operate only to New Delhi and Mumbai currently while Air India alone operates from India. There could be a vast change in the months to come. Delta has planned to launch a New York-Chennai flight, and Northwest will link Minneapolis and Bangalore. Air India will step up its services to the U.S. from 28 to 37 a week even as some European airlines will take advantage of India's open skies policy to tap the market potential. Given the business, tourism, and education links India enjoys with the U.S., the opening up of the skies should provide a strong impetus to bilateral relations in all these areas. India's private airlines such as Jet Airways and Sahara are waiting in the wings to operate services to the U.S. Consider the fact that between October 1, 2003 and September 30, 2004, the U.S. issued 3.04 lakh non-immigrant visas in India, 1.26 lakh of them from its Chennai consulate.

What will this mean for passengers and the market? It is clear fares will drop in a matter of months, more so after the private air operators begin their services. The European and Southeast Asian airlines, which seem to be enjoying the largest slice of the market in the India-U.S. sectors, will face stiff competition from both American and Indian players. The southern States, which seem to be riding the crest of development and investment flows, will be getting the bulk of the new services. Under the code sharing arrangements, European airlines could also be strengthening their presence in the Indian aviation scene, to provide multiple connections to the U.S. from their countries. Already, Lufthansa, Air France, and British Airways, which have done exceedingly well in the Indian market, have firmed up plans for the future. It is imperative for Air India to equip itself for such a competitive environment. The business and tourist traffic aside, the U.S. attracts a huge flow of students from India every year and the open skies policy will gladden their hearts.

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