With the purchase of Austrian and Swiss Germany's Lufthansa had put their airline into an advantage in having the option of three countries instead of one bilateral agreements with other markets.
FRANKFURT – Germany, Switzerland and Austria are now covered by one airline and three different names – the Lufthansa Group.
The global Star Alliance headquarter is based with Lufthansa in Frankfurt.
If the bilaterals – which translate into a reciprocal number of fixed seats or flights a week for airlines of each country – with Austria and Switzerland are indeed revised, it will be a big setback for the 30.1-billion Lufthansa. Europe’s biggest airline by sales is facing tough competition from Gulf carriers Emirates and Etihad in the Indian skies.
The government is taking a fresh look at India’s air traffic rights with Austria and Switzerland, four years after their national carriers were acquired by Lufthansa, possibly to coax the German airline into inducting Air India into a powerful global airline alliance.
The civil aviation ministry has approached its external affairs counterpart to check whether the effective control of Swiss and Austrian Airlines lie with their own nationals, said two senior aviation ministry officials, asking not to be named. “We are waiting for their opinion before we review the bilaterals (with Austria and Switzerland),” said the first official.
India has separate air traffic arrangements, known as Air Service Agreements or ‘bilaterals’ in aviation parlance, with Switzerland, Austria and Germany, among other nations. Lufthansa bought majority stakes in Austrian and Swiss in 2005 and 2008 and automatically won the flying rights allotted to these carriers.
But the second official said it should be the nationals of Austria and Switzerland who must benefit from the bilaterals rather than Lufthansa. “If we find that Lufthansa controls these airlines, the bilaterals will be affected,” he said.
The officials said the ministry is applying the same regulatory principle the foreign investments regulator used to clear Abu Dhabi’s Etihad Airways’ purchase of a 24% stake in India’s Jet Airways last week. Frank Puettmann, head of Lufthansa Group Communications, Asia-Pacific, said Swiss and Austrian are legally and operationally controlled by the national aviation authorities of their respective countries, adding that there are quite a few European airlines operating under similar legal circumstances in India and worldwide. He declined to comment further, saying bilateral agreements between nations are issues of the governments and not privately-owned airlines.
However, the first official said the external affairs ministry’s opinion was sought after repeated queries to the Austrian and Swiss authorities did not elicit a response.
Under the bilaterals, Emirates has been allotted 54, 200 seats a week and Etihad 36,670 seats a week after the government increased air traffic rights with Abu Dhabi by nearly three-fold in end April.
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