From e-tid.com (which answers my earlier question about the procedure to be followed now to allocate the rights...):
bmi joins BA and Virgin in bid for India flights
07 Oct 2004
The Civil Aviation Authority is expected to hold a 'scarce capacity' hearing to recommend which airlines should be allocated the extra traffic rights agreed last month between the UK and Indian governments.
The amended UK-India bilateral agreement increases the number of permitted weekly services between the two countries from 19 to 40 for both sides. Seven new frequencies for airlines of each country will be added this winter, seven more from summer 2005 and a further seven from winter 2005.
Currently, British Airways uses all of the UK’s 19 weekly frequencies, operating seven flights to New Delhi and Mumbai, three to Kolkata and two to Chennai. Air India, India’s only international carrier, uses just 11 of its entitlement, three of which are services to Delhi operated under a codeshare agreement with Virgin Atlantic.
A scarce capacity hearing is necessary as BA wants to increase its flights and Virgin Atlantic to operate services in its own right. In addition bmi, which at the moment operates no long-haul services out of Heathrow, has announced it intends to begin flights from the airport to Mumbai (daily) and Bangalore (six weekly) from next March.
In a statement Wednesday Sir Michael Bishop, bmi chairman, said: ‘We have long campaigned for greater access to long-haul markets for bmi’s award-winning services. bmi has actively sought to bring about changes to the bilateral agreements in existence between the UK and India. We are now able to demonstrate our commitment to serving this important market.’
bmi’s only long-haul services are from Manchester to Chicago, Washington and Toronto, with Las Vegas, Barbados, Antigua and St Lucia to be added later this year. The airline is currently prevented from flying transatlantic services from Heathrow by the terms of the UK-US bilateral aviation agreement.
All three UK airlines are expected to submit their proposals for new India services to the scarce capacity hearing, where they will be scrutinised by the CAA’s international aviation policy team. The CAA will then make recommendations to the Department for Transport as to which it believes would be most beneficial for passengers and economically. The final decision rests with transport secretary Alistair Darling.
Reading that, and especially the bit about Air India only using 11 of its 40, makes me think that bmi (or indeed Virgin, if they don't get the frequencies they want) would be better off getting into a JV with an Indian carrier to use Indian rights (ie Indian carrier has 51% control, but wet-leases a bmi aircraft, for example)...that's if any other Indian carrier other than Air India and Indian Airlines is allowed to fly internationally in the first place...