Govt not divided on India-Abu Dhabi traffic rights: PMO

The Prime Minister’s Office (PMO) claimed there was no disagreement within the government, or between ministers and the prime minister, over enhancement of bilateral air traffic rights to Abu Dhabi. 

A detailed study of the documents made public by PMO, however, shows that differences had surfaced over a number of riders attached with the recently-concluded memorandum of understanding (MoU) on air services with the UAE.

PMO clearly said in a note on Tuesday: “Changes in seat entitlements under bilateral air services agreements are normally entered into by the civil aviation ministry with its counterparts in other countries. 

These changes are done through an MoU and do not need approval at higher levels.” However, two days after the India-UAE Bilateral Air Services Agreement was concluded on April 24, Prime Minister Manmohan Singh had directed the civil aviation ministry to bring the matter to the Cabinet.

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The direction from the prime minister was followed by a formal request (on April 29) and, subsequently, a reminder (on May 20) from the PMO to the civil aviation ministry, to bring the matter formally to the Cabinet.

When a note was finally forwarded by the ministry for consideration of the Cabinet Committee on Economic Affairs (CCEA) on May 28, PMO asked for details of observations made on April 22 to be included in the CCEA note “to reflect the sequence of events and the discussions more accurately”.

Later, in a note dated June 13, PMO said the CCEA note drafted by the civil aviation ministry should mention that, after the meeting of an inter-ministerial group, it had approached PMO and the PM, urgently seeking clearance to conclude the agreement with Abu Dhabi, overriding the objections of the IMG. 

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The IMG had said not more than 26,000 additional weekly seats should be granted under bilateral traffic rights to UAE. It was said a visit of an official at the ministry was scheduled shortly and it would send a “wrong signal” if that were postponed.

The PM directed the finance minister to hold a meeting of the ministers of civil aviation, external affairs and commerce & industry to discuss the matter in detail.

According to the minutes of the meeting chaired by Finance Minister P Chidambaram on April 22, the issue of enhancement in air traffic entitlement between the two countries was considered in the overall economic interest of India and the government’s policy of liberalisation to attract foreign investment in various sectors, including the civil aviation sector.

It was decided that the negotiating team with UAE would be given the mandate to allow an additional entitlement of 40,000 seats per week, in a phased manner over three-five years, along with rights for third-country code-sharing and domestic code-sharing. The ministers briefed the PM later in the day, in the presence of the national security advisor and the principal secretary.

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PMO further asked the civil aviation ministry, in June 13 note, to observe in the re-drafted note that it had brought certain issues to the notice of the ministers.

To begin with, the Department of Economic Affairs (DEA) had reservations about the substantial enhancement being granted to UAE. Besides, some airlines had opposed the request for enhancement.

It was pointed out that private airport operators were not likely to support the enhancement, as they had made substantial investments in Delhi, Mumbai, Bangalore and Hyderabad and would like to develop these as hubs for air traffic.

An added effect of this enhancement would be that long-distance traffic from India to North America/Europe would be diverted to Abu Dhabi. PMO had said that if an Abu Dhabi-based airline acquired Jet Airways, the entity would control the bulk of the seats on this route. 

There was a possibility that other countries might make similar requests and, hence, a calibrated approach might be necessary.

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In response to these issues, PMO’s note said, the civil aviation minister had assured these concerns had been taken into account while arriving at the consensus of granting around 40,000 additional weekly seats to Abu Dhabi.

The minister had said, with the air traffic market growing rapidly, there would be a need to enhance entitlements. The added capacity would boost traffic at airports run by the Airports Authority of India. Besides, concerns could be addressed by phasing out enhancements.

The commerce minister, too, held that Abu Dhabi currently had the largest sovereign wealth funds in the world and it would be in the country’s interest to attract these to India. These views were endorsed by the finance minister and external affairs minister. On the basis of this, ‘in-principal’ go-ahead was given to the negotiating team on April 22.

PMO, however, says that subsequently “in the interest of wider consultations and greater transparency”, the prime minister directed that the matter be brought to Cabinet for a decision before operationalising any agreement arrived at by the government with the other party. 

The PMO directed the civil aviation ministry on June 13 to include this fact in the note and bring it before the Cabinet, and not CCEA. PMO additionally asked the ministry to include its comment on the note on ‘Impact of Middle Eastern Carriers on Indian Airlines’ in the Cabinet note.