India-UAE Open Skies Agreement Could Slash Airfares, Boost Trade
A new report advocating for an Open Skies Agreement between India and the UAE suggests that increasing seat capacity between the two nations could lead to a significant reduction in airfare and enhanced economic benefits. The study, "Combined Skies: Unlocking the Benefits of UAE-India Aviation Liberalisation for Indian Travellers," was released by the Observer Research Foundation and the UAE Embassy in India.
Current Constraints on India-UAE Routes
Despite growing demand, bilateral seat entitlements between the two countries have remained unchanged since 2014-2015—with 66,000 weekly seats for Dubai and 50,000 for Abu Dhabi. This limited capacity contributes to high airfare prices, especially during peak travel seasons, making last-minute flights unaffordable for many.
The report highlights that a 1% increase in passenger volume from India to the UAE correlates with an approximate 0.2% drop in average airfares. Additionally, a doubling of capacity over five years could yield more than $1.05 billion in savings for Indian travelers.
The Economic and Travel Benefits of Liberalisation
✅ Lower Airfares – More flights mean increased competition, leading to fare reductions, particularly for price-sensitive routes from Tier-2 Indian cities.
✅ Stronger Trade and Tourism – Expanded connectivity would facilitate business and leisure travel, boosting bilateral trade beyond the current $100 billion target under the Comprehensive Economic Partnership Agreement (CEPA).
✅ Enhanced Airport Infrastructure – The report calls for investment in Indian airports to develop international hubs in Delhi, Mumbai, and Bengaluru, ensuring Indian carriers remain competitive.
✅ Sustainable Aviation Growth – A joint India-UAE aviation initiative could foster cooperation on sustainable fuels and carbon-neutral airport operations.
Why Hasn’t an Open Skies Deal Been Signed Yet?
While the UAE has been keen on expanding bilateral air rights, India has hesitated due to concerns over its domestic airlines' financial stability. Past failures of Kingfisher Airlines (2012) and Go First (2023) highlight the volatility of India's aviation sector. Indian carriers, including Air India and IndiGo, have placed large aircraft orders exceeding 1,000 planes, but industry leaders worry that excessive foreign carrier access could impact their profitability.
Path Forward: A Gradual Approach
📌 The report recommends a phased 5% annual increase in bilateral seat capacity, projected to generate $152 million in consumer savings by 2028.
📌 It also urges both nations to expand UAE airline access to Tier-2 Indian cities while helping India develop its own global aviation hubs.
A Critical Moment for India-UAE Aviation
With 19 million passengers traveling between the two nations in 2023, accounting for 30% of India's international air traffic, the report warns that India must act swiftly to capitalize on this aviation boom. UAE airlines like Emirates and Etihad are already exploring other markets, and restrictive air policies may make India less significant in their future expansion plans.
📢 As demand for air travel surges, will India and the UAE seize this opportunity to revolutionize the aviation sector?
