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Joint secretary of the Indian Ministry of Civil Aviation R.K. Singh and Esmond Lee, deputy secretary of the Transport and Housing Bureau of Hong Kong, agreed to 27 new services for each side on India-Hong Kong routes. This is more than double the existing levels. While the Indian side can operate Hong Kong service from any city in India, Hong Kong carriers can operate 10 services to New Delhi, six services to Mumbai and pool 11 services between Bangalore, Chennai and Kolkata.
Civil aviation authorities in both places have hailed the successful outcome of the talks as a major step forward in their aviation relationship. Hong Kong's Transport and Housing Secretary Eva Cheng said, "This is very good news for the airlines of the two sides. More competitive air services between Hong Kong and India will definitely benefit the traveling public."
For Hong Kong's 30,000 ethnic Indian travelers, it is welcome news, long overdue. Sachin Pradhan, a frequent business traveler to India, feels that more seats would ease the pressure of having to book days in advance. "It has been extremely difficult to get seats due to increased travel by Indian locals and the restricted number of services operated. With more services, we hope that the fares will come down and availability of seats will be better," he said.
While there is hope that increased services would add more connectivity to cities other than Mumbai and New Delhi and improve flight timings, lower fares is what most Hong Kong travelers are wishing for. Rajiv Pandiya, financial controller of Black & Decker in Hong Kong, calls the current fares to India "scarcity pricing," where a lack of supply and high demand for seats have kept prices inflated.
"Fares to India are grossly over-priced and ridiculously high. For example, traveling to India, you could be paying the kind of fares that one pays for flights to the U.S. and Australia. Therefore, if you compare the cost of operations, India should be cheaper due to shorter flight travel times. So, I believe that fares should come down, as more services are added," he said.
Beyond the realm of increased services, both sides also reached an agreement on the right to land in a second country, pick up passengers, and fly on to a third country where the passengers then deplane. Out of the 27 services offered to each side, Indian carriers will be able to operate 14 services to cities on the North American west coast like Los Angeles, San Francisco and Vancouver by picking up passengers in Hong Kong. Reciprocally, Hong Kong carriers will be able to exercise the same rights through India on 14 services to Europe excluding the United Kingdom.
The two sides have also entered into a liberalized code share agreement -- a practice where a flight operated by an airline is jointly marketed as a flight for one or more airlines. Under this agreement, the airline that actually provides the plane, crew, and ground handling services operates the flight while other airline companies sell tickets for that flight but do not actually operate it. Such agreements will enable Indian and Hong Kong airlines to share seats on their flights with others as well as market seats on airlines from other countries. Indian carriers are already looking to serve New Zealand via Hong Kong with code share agreements with Air New Zealand.
Although such liberalized arrangements are expected to increase competition on the India Hong Kong route and benefit travelers, the real goal is to increase trade relations, aid business, and attract more tourism activities between mainland China and India.
Pradhan believes that increasing economic activity as well as strong economic growth in India and China is fuelling more business travel between the two countries, and expects it to increase as cooperation on various manufacturing and trading issues expands. "The Indian rupee is also very strong, which has led to more casual travel between both destinations. So, with more direct connections, trade and tourism will benefit both economies, especially India," he says.
Hong Kong-based Dragonair, which serves 34 Asian destinations including 21 cities in China, has welcomed the new air services arrangement as a significant boon for the Hong Kong hub. "The air services deal is an exciting development for Hong Kong aviation and we at Dragonair look forward to fulfilling a long-held wish to enter the Indian market," Chief Executive Officer Kenny Tang said.
More flights and direct connections to Chinese cities is what Indian businesses will bank on to compliment their growing trade with Chinese companies. As Pandiya says, "India is not very well connected with mainland China and with trade booming between both the countries, the reverse traffic from India via Hong Kong into Chinese cities would be very big traffic. Most business travelers current fly to China via Singapore or Thailand. So direct flights would impact tremendously."
The talks on liberalizing air services come hot on the heels of a high-level mission to India by Hong Kong Financial Secretary John Tsang in mid-December. Although his trip was to foster closer economies ties, the agenda was not restricted to financial issues but also extended to tourism, civil aviation, and trade. Tsang had called for more flights between the two countries and had expressed hope that jurisdictions could culminate in an air services agreement.
While liberalizing air services has landed governments and travelers in a win-win situation, it remains to be seen whether implementation will hit turbulence after take-off, or whether it will be smooth flying.
