Akasa Air warns of high air fares if seats not increased under bilateral rights

New Delhi: India's youngest airline Akasa Air is concerned about some markets such as Dubai where the bilateral rights, which fix the number of seats or flights that can be operated between two countries, are completely exhausted on both sides, and plans to urge the government for expansion of such rights, its top executive said.

"I think our government is smart enough to figure out what needs to be done to protect India's future in a manner that does not necessarily saddles Indians today with unusually high fares. For example, if we don't open up Dubai for the next 10 years, because we think we are flowing a lot of international traffic via Dubai, I can assure you that air fares to Dubai can reach to ridiculous levels. I think the government knows that, I think they will find a way to navigate," Akasa Air founder and chief executive officer Vinay Dube said.

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The bilateral rights on India-Dubai route were last amended in 2015, when both governments agreed to allow a maximum of 65,000 seats in each direction per week by the airlines. A bilateral air service agreement mandates a limit on the number of seats or flights that airlines can allocate between two countries. India currently has bilateral air service agreements with 116 countries.

Recent Ventures

The airline, which commenced operations in India in August 2022, recently ventured into the overseas segment. In March this year, it launched its international operations with its maiden overseas destination as Doha. From July, Akasa will add Jeddah as its second international destination.

"We will continue to petition to increase bilaterals but in the mean time, we will focus on the ones that have the bilaterals available. We have already got bilaterals for Kuwait, Abu Dhabi allotted for us. There are bilaterals available for Sri Lanka, Nepal, Bangladesh, Indonesia etc," Dube said.

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Dube reiterated that the airline's sole focus is on following the money trail of profitability and it does not have an emotion or target associated with its network. He was speaking over a roundtable discussion on the sidelines of CAPA India Aviation Summit 2024 in New Delhi.

Dubai-based Emirates has also voiced concerns over restricted seats on flights on India-Dubai sector, one of the busiest routes for the airline. Currently, carriers on both sides are operating to full permissible capacity or 65,000 weekly seats. Hence, new carriers such as Akasa Air are unable to get slots for Dubai.

A Ray of Hope

With the new BJP-led NDA government expected to be formed shortly, with the help of the Telugu Desam Party (TDP), there are renewed hopes among stakeholders about an assessment on increase in bilateral rights for some markets such as Dubai. It is understood that the TDP, an alliance member of the NDA during 2014-2019, was one of the political voices at the forefront of support for the bilateral expansion in 2015.

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Aviation research firm CAPA India on Wednesday estimated a consolidated loss of $0.4-0.6 billion for FY25 for Indian airlines. It had projected a loss of $1.6-1.8 billion for Indian airlines in FY24.

Further, CAPA India has also projected an operating revenue of around $20 billion for the Indian carriers this financial year. It has pegged domestic traffic at 161–164 million passengers for FY25, a rise of 6-8%, and international traffic at 75–78 million passengers, an increase of 9–11%.