Doubling airline capacity through a liberalised air service agreement between India and the UAE will result in savings for Indian consumers exceeding $1.05 billion who are currently paying steep airfares, according to a joint report by the UAE Embassy and the ORF released on Wednesday.
Doubling of capacity over five years could yield an economic benefit exceeding $1.05 billion to Indian consumers, the report says. Even a phased 5% annual increase in bilateral seat capacity leading to a cumulative 20% increase is projected to add over $152 million in consumer surplus by 2028.
“Adopt a strategic, phased approach to open up the skies, and do so with urgency. This will ensure that both countries stay ahead of demand, capitalise on mutual opportunities, and jointly secure their position as global aviation leaders,” the report states.
It comes at a time Dubai-based Emirates airline has sought a revision of the bilateral air service agreement as it has reached the maximum capacity of 66,000 seats per week to Indian destinations, and Indian airlines have also neared the upper limit. These demands have been vehemently opposed by Air India, whose CEO Campbell Wilson warned in 2023 that India must not open the “floodgates to foreign carriers” that divert traffic to their hubs as it was not in the “national interest” because the erstwhile national carrier was making large investments and buying aircraft to provide non-stop connectivity to the US and Europe. The bilateral air service agreement was signed between the UAE and India in January 2014.
In a recent media interview, UAE Ambassador to India Abdulnasser Jamal Alshaali said that they have proposed a 4:1 seat ratio to the Indian government , but that needn’t be a “starting point”. The proposal implies an offer of four seats to Indian carriers for every seat offered to UAE carriers.
The study also seeks “dynamic seat allocation mechanisms” that are reviewed annually based on actual demand rather than fixed quotas.
Further, in order to permit greater access for UAE airlines to India’s tier-2 and tier-3 cities such as Jaipur, Lucknow, Coimbatore, Vishakapatnam, Patna, Bhubaneswar, and Amritsar, the report urges for an open skies with UAE similar to the ASEAN countries.
It has also suggested collaboration to strengthen aviation hubs in both countries and “develop complementary strategies rather than competing for transit traffic.”
It adds, “While Dubai and Abu Dhabi are established global transit hubs, India can position Delhi, Mumbai, and Bengaluru as secondary hubs feeding into UAE airports, reducing passenger loss to indirect routes via third countries.”
This can be achieved through interline agreements between Indian and UAE airlines, mutual infrastructure investment where UAE can support Indian airport expansion projects through public-private partnerships (PPPs) such as the Adani Group’s partnership with Abu Dhabi Airports for Mumbai Airport management. Lastly, it has also proposed hub synchronisation strategies to optimise layover times and passenger flows “to boost the competitiveness of Indian airports while reinforcing the UAE’s role as a global aviation gateway.”
Published – March 19, 2025 09:40 pm IST