Austria: Lufthansa, Swiss and Austrian - a front for one airline to triple bilateral agreements?

With the purchase of Austrian and Swiss Germany's Lufthansa had put their airline into an chance in having the option of three nations instead of one bilateral agreements with other markets. Germany, Switzerland and Austria are presently covered by one airline and three different names - the Lufthansa Group.

The world Star Alliance headquarter is based with Lufthansa in Frankfurt.

If the bilaterals - which translate into a reciprocal number of fixed seats or flights a week for airlines of each country - with Austria and Switzerland are indeed revised, it will be a large setback for the 30.1-billion Lufthansa. Europe's biggest airline by sales is facing tough competition from Gulf carriers Emirates and Etihad in the Indian skies.

The government is taking a fresh look at India's air traffic rights with Austria and Switzerland, four years next their national carriers were acquired by Lufthansa, possibly to coax the German airline into inducting Air India into a powerful world airline alliance.

The civil aviation ministry has approached its external affairs counterpart to check whether the effective control of Swiss and Austrian Airlines lie with their own nationals, said two senior aviation ministry officials, asking not to be named. "We are waiting for their opinion before we review the bilaterals (with Austria and Switzerland)," said the initial official.

India has separate air traffic arrangements, known as Air Service Agreements or 'bilaterals' in aviation parlance, with Switzerland, Austria and Germany, part other nations. Lufthansa bought majority stakes in Austrian and Swiss in 2005 and 2008 and automatically won the flying rights allotted to these carriers.

But the second official said it should be the nationals of Austria and Switzerland who must benefit from the bilaterals rather than Lufthansa. "If we find that Lufthansa controls these airlines, the bilaterals will be affected," he said.

The officials said the ministry is applying the same regulatory principle the foreign investments regulator used to clear Abu Dhabi's Etihad Airways' purchase of a 24% stake in India's Jet Airways last week. Frank Puettmann, chief of Lufthansa Group Communications, Asia-Pacific, said Swiss and Austrian are legally and operationally controlled by the national aviation authorities of their respective nations, adding that there are completely a few European airlines operating under similar legal circumstances in India and worldwide. He declined to comment further, saying bilateral agreements between nations are issues of the governments and not privately-owned airlines.

However, the initial official said the external affairs ministry's opinion was sought next repeated queries to the Austrian and Swiss authorities did not elicit a response.

Under the bilaterals, Emirates has been allotted 54, 200 seats a week and Etihad 36,670 seats a week next the government increased air traffic rights with Abu Dhabi by nearly three-fold in end April.