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Debate around bilateral rights 'silly': Etihad CEO Antonoaldo Neves
The ongoing debate on whether bilateral rights between India and Gulf nations should be increased only when there is substantial point-to-point traffic is 'silly,' as demand is so high that it can accommodate everyone, Etihad Aviation Group chief executive officer (CEO) Antonoaldo Neves told Business Standard. He added that each airline's cost and pricing model serves a different customer segment.
His comments come a day after Air India CEO and MD Campbell Wilson said that bilateral flying rights should be increased only if there is substantial point-to-point demand.
At the core of the debate are concerns from Indian airlines that Gulf carriers carry limited point-to-point traffic between India and West Asia, instead using their hubs in Dubai and Abu Dhabi to predominantly taking passengers onward to Europe and North America.
'The discussion is just silly because in the end, we don't price like that. We price according to demand,' Neves said. He added that Indian carriers — like IndiGo — have some of the lowest unit costs in the world and are able to offer cheaper fares to Abu Dhabi, while Etihad targets a different set of passengers.
Neves said talks between India and Abu Dhabi for additional rights have not yet begun but should start soon. 'It is the right time to start the discussions,' he said.
He mentioned that the demand for seats on Etihad's India flights are 'very high' but the aircraft supply in itself 'remains constrained' due to supply chain issues. The load factors on Etihad's India flights remain above 90 per cent throughout the year.
'So, what we need is a staggered approach. We need to increase the bilateral rights between the two countries in a staggered manner,' he added.
The bilateral air services agreement between India and Abu Dhabi currently allows for 50,000 weekly seats for airlines from each side. Both Indian and Abu Dhabi-based carriers have fully utilized their allocated flying rights.
Speaking against allegations that Gulf carriers enjoy an unfair edge, Neves said, 'I believe in trade agreements and traffic right agreements that are balanced so that both sides have the same tools to compete. And they explore the opportunity in a balanced way.'
He said Indian airlines are well-positioned to compete. 'Indian carriers' unit cost is better than ours. So, this story that Indian carriers don't have an ability to compete is not of today. It's an old story,' he added.
Neves said Etihad could have used the same argument to block expansion. 'Etihad could say it doesn't want any increase in bilateral rights because IndiGo has a much lower unit cost due to low labour costs. But I am not saying that. I am saying that both – Abu Dhabi and India – are pro-market places that encourage competition,' he added.
He also questioned claims of protectionism. 'I think there's a lot of discussion about this protectionism, but I don't think it matches the action. Because if the action was protectionism, why did IndiGo just announce a partnership with Air France-KLM? Why is IndiGo not flying all over Europe before they do a partnership with Air France-KLM?'
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