New aviation guideline to hit Air-India’s revenue

Mumbai: In a move that could dent state carrier Air-India’s bottomline, the director general of civil aviation (DGCA) has approved phasing out the commercial mandatory agreement for airlines, which stipulates that foreign carriers operating to India have to enter into seat block arrangement and code sharing with state carriers, by January 1, 2010.
The move would mean that foreign carriers can choose code-sharing partners other than Air-India and will not have to pay royalty fees. In 2004-05, Air-India earned Rs 550 crore through commercial mandatory agreements, an increase of 18.36% over the previous fiscal.
Analysts feel that foreign airlines may even opt for private carriers like Jet Airways, Air Deccan and Kingfisher Airlines for having seat block agreements,although they will have to take into consideration the fact that a majority of the landing slots are still with the state-owned carriers.
21/04/06 Sagar Malviya & Neelasri Barman Financial Express

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