As Air India had since inception continued to enjoy exclusive right (Right of First Refusal) over foreign routes due to its historic monopoly over foreign routes, private airlines could operate only when the national carrier said it would not operate on them.
As a result, several routes and flying slots remained unutilised.
However, Air India's operational plans would get due consideration when traffic rights and entitlements are allocated, new changes made in the bilateral policy show.
The Civil Aviation Ministry has now decided to allow all scheduled Indian carriers, including Air India, to utilise allocated bilaterals till they reach the maximum permissible limit under Air Service Agreements (ASAs) with various countries, an official spokesperson said.
The ASAs fix the maximum number of flights or seats to be operated by designated carriers of both countries each week.
The allocation of traffic rights to Indian airlines would now on be done well in advance upto a maximum limit of five schedules, keeping in mind the demands from them, their capacities and capabilities, operational plans and other factors, the spokesperson said.
The utilisation of these rights by airlines would be regularly monitored and oversight maintained on them by the Ministry. In case of underutilisation or non-utilisation of these rights, the Ministry could cancel them and levy penalties on the airlines, according to the changes made in the policy.
While code-share operations between an Indian and a foreign carrier would be encouraged under the new arrangement, all steps would be taken to promote development of hubs to enable Indian airlines to carry Sixth Freedom traffic and attain a dominating position in the region, the spokesperson said.
Sixth Freedom is the global aviation right to carry passengers or cargo from a second country to a third country by stopping in one's own country. For example, a passenger is carried from London to Sydney by a Singapore Airline flight via Singapore.
The Ministry would regularly review the bilaterals to promote global connectivity keeping in mind the demands by the Indian carriers, international passenger traffic, trade, commerce and potential global and regional issues, the spokesperson said.
In order to cater to the travel, trade and commerce needs to countries which do not have Air Service Agreements with India, the Ministry would consider signing ASAs with them.
The policy changes were carried out on the basis of the approach outlined in a discussion paper of an Inter Ministerial Group on the issue.
According to official estimates, private airlines have sought 50,000 international seats in 2011, over 40 percent of which are for destinations in the lucrative Middle East.
In Europe, Indian carriers use less than 10 percent of the allowed capacity, leaving up to 90 percent of the market share to foreign carriers. Air India, Jet Airways and Kingfisher fly to France and Germany and no one flies to Spain, Denmark, Norway, Sweden or Switzerland.
In the Asia-Pacific, foreign carriers have 55 percent of the share.