Government should encourage competition in transport sector

Yahoo News, February 17, 2012

The government should take active steps to encourage competition in the transport sector to allow passengers to benefit from low costs and greeater choices, consumer rights group CUTS International said Friday

“There is a need for the government to take bold steps in sectors such as passenger transport,” said CUTS International secretary general Pradeep Mehta, citing the recent decision to end a decade-old stranglehold of state-owned Air India on foreign flying rights.
According to Mehta, the government should do away with section 104 of the Motor Vehicles Act which restricts the grant of permits for notified areas or routes.

“section 104 is an utter violation to competition and mandates that temporary permits to private parties in respect to notified area or route can be provided only if the state transport undertakings has not applied.”

The development comes as the government Feb 14 allowed domestic private airlines to expand their overseas operations by using the maximum permissible limits of bilateral flying rights.

So far, only Air India had the right of first refusal to fly on international routes agreed between India and foreign countries through bilateral air service agreements (ASAs).

The Feb 14 decision freed up flying rights on the under-utilised routes reserved for the flag carrier.

Indian carriers utilised just 20 percent of their overseas entitlement, against 39 percent into India by foreign airlines between January to November 2011. The share of the passenger market emanating out of and into India varies from sector to sector.

Indian carriers use less than 10 percent of the allowed capacity in Europe and the rest is being utilised by foreign carriers. In the Far East markets, the numbers are around 40 percent with domestic carriers and 60 percent with foreign carriers

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