The ICAO had last year expressed concerns that a foreign-owned airline operating from India may have legal and procedural issues in obtaining seats under bilateral rights for flying abroad
While Qatar Airways chief Akbar Al Baker has announced that the cash-rich Gulf carrier will soon start a fully-owned foreign airline in India, sceptics claim that it won't be a cakewalk.
Though the challenges are many, the main roadblock will be International Civil Aviation Organisation (ICAO) guidelines over 'effective control and ownership' of the airline, said Devesh Agarwal, a Bengaluru-based aviation analyst, said.
The ICAO had last year expressed concerns that a foreign-owned airline operating from India may have legal and procedural issues in obtaining seats under bilateral rights for flying abroad.
The air service agreements (ASAs) signed between tow countries usually mandate that airlines from either country have their substantial ownership and effective control (SOEC) vested with citizens of the particular country. These ASAs are based on ICAO template, and even though they are not binding, most countries include them in their bilateral rights agreements.
ICAO had raised the concerns after India further opened the aviation sector last year.
As per the new rules, 100% FDI is allowed with the condition that no foreign airline will have a stake. However, if there is a foreign airline partner, then the FDI is limited to 49%. Vistara and AirAsia entered the business under the second option.
"While all present airlines in India are surely going to raise a hue and cry over the issue, it will be very interesting to see how Vistara and AirAsia will react," said Agarwal.
An aviation consultant who did not want to be named said, "It's not possible for Qatar Airways to start a fully funded airline under the current rules. It could be done only if the Indian government could tweak the rules to accommodate the deal considering larger economic interests in mind," said the consultant.
Earlier a media report had said Qatar government was invited by India to start an airline in the country.
Rajan Mehra, COO, at Club One Air, a former India head of Qatar Airways, is highly optimistic about the announcement. "There would definitely be a lot of issues to deal with, but I am sure things will work out as they have been striving since the past few years to get into the lucrative Indian market. Though their attempts to purchase stakes in IndiGo airline did not materialise, they are now getting around by opening a new one."
Flush with petro dollars but facing a slowing economy in the region, Gulf-based airlines have been investing in airlines across the world including India. Etihad has bought a 24% stake in Jet Airways. This is a far cry from the mid-2000s when thousands of seats were allotted to the middle-eastern airlines, giving them a dominant position as international carriers.
So much so that Emirates with its huge feed from India began to be jocularly called ' Unofficial national carrier of India'. Economically weaker Indian airlines, on the other hand, could not even use their entitled seats, forcing CAG to slam the Indian government for not able to protect their interests.
According to an IATA report, India's air transport sector already supports 8 million jobs and contributes $72 billion in GDP. In its air passenger forecast report, IATA expects India to displace the UK to become the third-largest aviation market in the world, with 278 million passengers in 2026. Further, by 2035, the Indian market is expected to surge to 442 million passengers.
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