International aviation services operate within a complex, multidimensional structure which resultsfrom the intersection of treaty obligations, bilateral agreements, and, most importantly, domestic regulations. Each of these is operating in sync or in contrast with the others in determining conditions under which airlines may access foreign markets and exercise traffic rights, resulting in constant tension. The Convention on International Civil Aviation, concluded in Chicago in December 1944, is the foundational treaty of international aviation law. The Convention sets forth various rules and standards regarding air navigation, nationality, airworthiness, aircraft registration, and crew licensing, and within Part II of the treaty establishes an organisation called the International Civil Aviation Organisation, comprising an Assembly, a Council, and an Air Navigation Commission. The ICAO plays a crucial role in administering dispute resolution under Article 84 and also provides a structural framework within which states negotiate Bilateral Air Services arrangements. Article 1 of the Convention on International Civil Aviation states that “every state has complete and exclusivesovereignty over the airspace above its territory”.

This principle of “sovereignty of the state” is not novel in its essence, as it is a common proposition in international law; however, it has far-reaching consequences in the arena of international aviation. These principles make every grant of air traffic rights a state’s discretion. Unlike international commerce, where trade is assumed to be permitted unless denied exclusively, in international aviation, the legal position is reversed. The state’s airspace is denied unless specifically granted and therefore, is not an automatic legal entitlement, and India, being the contracting party to the treaty, has based its international aviation framework on Bilateral Air Services Agreements (ASAs). No airline can simply acquire the rights to operate in international airspace by commercial demand. It needs to be granted through multilateral or bilateral instruments. India has executed Bilateral Air Services Agreements with a total of 116 countries to enhance “global connectivity”.

Bilateral Air Services Agreements: The Cornerstone of India’s International Aviation Regime

A Bilateral Air Services Agreement (BASA) permits commercial air transport between two countries that are signatories to it. It is a treaty-level instrument and is negotiated between the governments of concerned countries to grant a legal permit for the operation of scheduled international air services in airspace above their respective territories. It is derived directly from the principle of the Chicago Convention, wherein Article 6 states that, “No scheduled international air service may be operated over or into the territory of a contracting State, except with the special permission or other authorization of that State, and in accordance with the terms of such permission or authorization.”

The rights granted under BASAs are often expressed through the internationally recognised “Freedoms of the Air”. In practical terms, these freedoms determine the extent to which an airline may carry passengers, cargo, or mail between countries. While the Third and Fourth Freedoms permit carriage between an airline’s home State and another State, the Fifth Freedom goes a step further by allowing carriage between two foreign States as part of a service connected to the airline’s home State. The commercial significance of these rights becomes apparent in bilateral negotiations, where the value of a right often depends as much on its practical utilisation as on its formal grant.

A typical BASA contains several key provisions to regulate the extent of market services that areavailable to each contracting state. The provision of designation empowers the government to nominate an airline to operate its air services under BASA. Capacity entitlements determine the extent of services that a designated airline may operate under BASA, such as Article IV of the agreement between the government of India and the government of the Republic of Lebanon relating to air services.

Capacity entitlement is either expressed as weekly frequencies of travel or as aggregate weekly seat entitlements, and they are the most commercially sensitive segment of the BASA. It can be best understood through the India-Gulf corridor negotiations. Bilateral seat capacity on the India-Dubai sector had been enhanced from 10,400 seats per week each direction in 2003-04 to 66,504 seats per week by February 2014. This substantial increase in capacity entitlements has exceeded the requirements of Indian carriers. Therefore, BASA should be negotiated by striking a balance between consumer demand and global connectivity against the carrying capacity of the airlines.

Route rights within bilateral agreements govern the scope of international traffic or air services available to the contracting parties. The 2016 CAG audit found that while Indian carriers had fifth freedom rights, which permit an airline to carry passengers or cargo between two foreign countries as part of a service originating or ending in its home state, under 41 of 50 bilateral agreements reviewed, those rights were being utilised on only six sectors across ten countries. This demonstrates that the grant of route rights alone does not guarantee their effective utilisation. The ability to exercise such rights depends upon commercial viability, fleet availability, network strategy, and the competitive position of domestic carriers. Consequently, bilateral negotiations must focus not only on securing additional traffic rights but also on creating conditions that enable Indian airlines to meaningfully utilise the rights already available to them. One of the shortcomings of the Bilateral Air Service agreement is that although BASA is a reciprocal instrument, it rarely puts both contracting parties at an equal bargaining position. As stated earlier, in the case of the India-Gulf corridor, their carriers enjoy significant financial backing from the state and have requested capacity entitlement beyond what Indian carriers can match, consequently benefiting foreign carriers more.

India’s Open Skies Policy: Promise, Progress And Constraints

The open skies policy came into existence post the Chicago Convention, as the rigidity of bilateralism got diluted due to the escalation of air travel for commercial necessity. US entered into bilateral agreements with several other countries, and it served as a foundational impulse to dismantle state control and ultimately liberalised international aviation. India’s approach to the liberalisation of air services has evolved significantly over the past three decades due to competing pressures of the 1990s economic liberalisation, consumer demands, and the resulting global connectivity. The “Open Skies” policy forms part off a liberalised air services regime under which, the participating states substantially reduce their restrictions relating to routes, capacity, frequencies, pricing and designation, while continuing to regulate operations through mutually agreed legal frameworks. Unlike BASA,which regulates international air services through detailed negotiations of government of the concerned countries, the open skies policy permits use with fewer restrictions.

India has discovered a middle path, which is not fully restrictive rather, it adopts an open skies policyselectively based on geography, commercial sensitivity, and the competitive position of its domestic carriers. The Ministry of Civil Aviation’s policy directions, the Civil Aviation Requirements (CAR) issued by the Directorate General of Civil Aviation (DGCA), and most significantly, the National Civil Aviation Policy (NCAP) of 2016, these frameworks together govern international aviation for India. Under NCAP, in 2016, India adopted an open skies framework based on the SAARC countriesand countries situated beyond a radius of 5,000 kilometres from New Delhi under Section 9, the bilateral traffic rights. It also permits foreign airlines to operate unlimited flights in accordance withthe existing bilateral rights, which will be allowed directly to and from major international airports within the country, as notified by the MoCA from time to time. These policies exhibit India’s selective approach towards liberalisation of international aviation. While it permits unrestricted operations at major international airports, it does not override the bilateral framework in place and empowers MoCA to notify the same, indicating regulatory flexibility and governmental control over the pace and extent of aviation liberalisation.

However, these policies mainly govern commercial transport from geographically distant countries. With respect to the liberalisation of proximate markets, BASA is the regulatory mechanism in place. Such a calibrated approach of India reflects its preference towards the middle ground, that is, gradual liberalisation rather than unrestricted market access. However, when it comes to practical application,NCAP blurs the boundaries between when a bilateral agreement governs and when the open skies policy applies, as a particular route is not always commercially transparent. Open skies policies are also subject to certain structural variables, such as slot saturation at congested airports. A carrier may have the right to accommodate additional frequencies on a commercially attractive route, but may not have the airport infrastructure to exercise that right to accommodation.

Conclusion

India’s international aviation framework reflects a tension between liberalisation and control, which the government has to balance rather than resolve. The Open Skies framework under NCAP, 2016,represents a partial deviation from bilateralism, but it lays down certain geographical boundaries within which it operates, and it is subject to the discretion of MoCA. In practice, it creates ambiguity in certain instances between BASA and the open skies framework in NCAP, which may ultimately result in certain commercial costs.

The current stance of India pertaining to the open skies framework is not a complete abandonment of the bilateral framework, but rather a more deliberate alignment between aviation diplomacy and commercial readiness. For a foreign airline seeking market access to India and having an operational route to and from SAARC countries and beyond five thousand kilometres from New Delhi benefit from the open skies policy of NCAP, 2016, due to unlimited frequencies to designated major international airports without requiring case-by-case bilateral capacity negotiation. For proximate markets, BASA still remains the mechanism in place, and capacity expansion relies on diplomatic negotiations between the governments rather than mere commercial demand.

As India’s aviation sector continues to expand, the future of its international air services regime will depend on how effectively it balances sovereign control with the demands of an increasingly interconnected global aviation market.

this content is First publish at: https://www.maheshwariandco.com/blog/india-open-skies-policy-law-liberalisation/