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India opens door to private carriers

India's government has finally given private airlines rights to operate international services, and the country's two main players have taken immediate advantage of the more liberal policy. Air Sahara and Jet Airways had been seeking international rights for years. Their day came late in March when both started operations on the same day to the Sri Lankan capital Colombo.

In 2003 the Indian government surprised industry observers by pledging to open up its air services regime and vowing to pursue far more liberal policies for many key international markets. It also said locally registered private carriers could operate international services to select destinations, initially those in South Asia.

Air Sahara and Jet had been preparing for international services since late last year, when the Indian and Sri Lankan governments reached agreement-in-principle to allow new players to enter the market. Both are now operating Boeing 737s on daily flights between Chennai and Colombo and expect to start services to Sri Lanka from other Indian cities, pending government approvals.

The two are now competing in the India-Sri Lanka market with state-owned Indian Airlines and SriLankan Airlines, which is 43%-owned by Emirates. The market for travel between the two countries has been growing steadily in recent years, prompting the established players to also increase services.

SriLankan chief executive Peter Hill says the carrier now has around 60 weekly flights to India, up from 45 as of late last year, and this will rise further, to around 75 weekly flights, in the winter schedule. He expects demand for SriLankan's services to remain strong despite the increased competition, requiring the airline to further boost capacity. He says negotiations are being held with suppliers for the lease of two additional Airbus A320s, which will be used mainly for India services, as well as one more Airbus A340-300, for long-haul services. The A320s should be added around July or August.

"We're fairly bullish, provided the situation in the country doesn't change," Hill says of the security situation. More people have been travelling to and within Sri Lanka since a ceasefire agreement was reached with Tamil separatists two years ago after more than 20 years of civil war.

SriLankan's expansion plans are on top of those announced late last year, when the carrier said it was adding two more A340-300s and two more A320s.

NICHOLAS IONIDES COLOMBO

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