NEW DELHI, 30 December 2004 — India yesterday gave domestic private airlines approval to begin overseas longhaul flights in what it said was a bid to spur competition.

Until now, only state-owned carriers Indian Airlines and Air India have been able to fly long-distance routes, a policy that has resulted in India’s not utilizing landing rights in several key locations.

A government statement said it had thrown open the routes to private carriers to boost competition and pave the way for lower fares.

“The Cabinet has cleared the proposal for allowing domestic private airlines to fly overseas,” Civil Aviation Minister Praful Patel told a news conference.

At the same time, the government protected its money-spinning Gulf routes for the next three years for the two state-owned carriers. The airlines earn most of their revenues from these routes as many Indians work in countries such as Kuwait and Saudi Arabia.

“Private airlines will not be allowed in this region during the period,” Patel said.

The government also imposed another key rider, saying only those airlines with at least five years’ flying under their belts and which “have logged a good mileage as proof of their experience” could carry passengers abroad.

Jet Airways, India’s largest domestic airline, and Air Sahara, the country’s third-ranked carrier, are the only two with five years’ service.

Indian low-cost carrier Air Deccan, launched a year ago, and Kingfisher Air which plans to start flying in April, had hoped to fly foreign routes.

The government said in a statement the move to throw open long-haul routes to private carriers meant “passengers will have a greater choice” and tariffs are “likely to become more reasonable.”

The step follows a recent government decision to raise the ceiling on foreign equity stakes in Indian carriers to 49 percent from 40 percent to boost investment. Foreign airlines, however, are not allowed to take any stake in Indian carriers.

More than 15 million people boarded planes to travel within India in the last financial year, up 20 percent from the previous year, industry figures show.

The number of passengers is expected to grow to 50 million in five years as a booming economy and new low cost carriers stimulate demand, analysts say.

But analysts say another key area that must be cleaned up before the sector really takes flight is airport infrastructure. Terminals are shabby and airports do not have enough traffic capacity.

Patel has promised to appoint firms to modernize airports in the key gateways of Delhi and Bombay next year. Another 22 airports will be built or refurbished in other areas.