New airlines may take more than 2 years to get short-haul global flying permits

Airlines said if the central government's proposed credit-based system replaced the current rules, this would be the impact: It would take a new domestic carrier a minimum of 12 aircraft and operations of over one-and-a-half years in the country before it could fly on long-haul international routes. Airlines said, for short-haul global routes, a new domestic airline would take two years or more, and a minimum of 15 planes.

The current 5/20 rule allows global operations after five years and with 20 aircraft.

A sector representative said, "An airline with five planes will take two-and-a-half years to acquire the 300 credits needed to fly on long-haul international routes. We are working on estimates and will send these to the Union civil aviation ministry soon."

Airlines have sought two weeks to respond to the ministry's proposal.

An executive at an airline said it was surprising that the new airlines were upset about the proposed changes. "The new rules are a substantial dilution of the existing ones," he said.

For IndiGo, SpiceJet, Air India, and Jet Airways, which fly on international routes, credits will be allotted on the basis of their records.

An AirAsia executive said the airline hoped the "stringent" policy would be reviewed.

The ministry has proposed that airlines earn at least 300 domestic flying credits (DFCs) before they fly international routes of more than six hours. Airlines will need at least 600 credits for flights on shorter routes to the Gulf and Southeast Asia (less than six hours).

These credits will be based on routes and distances airlines fly domestically, with higher points for flights to remote areas. Credits will be lower on flights between metros and large cities, and these will be based on the number of seats offered and not on passengers.

"It is clear whose purpose the government serves by setting the first barrier at six-hour flights. This is another example of airline-specific decision-making," said aviation consultant Anurag Jain.

Jain feels an airline will be able to achieve 200 credits with six planes if it operates on a mix of key metro and remote-area routes. This is because flying on remote-area routes will earn more credits. "Credit on remote-area routes will be determined by the number of passengers flown and not by the number of seats deployed. Airlines may have to wage price wars to maintain their loads on remote-area routes as higher loads will enable these to earn higher credits," he added.

The ministry has tweaked the definition of trunk routes to those with yearly passenger traffic of 500,000, a length of 700 kilometres, and a passenger load factor of at least 70 per cent.

Eight more routes will be added to the list of 12. These are Bengaluru-Pune, Delhi-Ahmedabad, Delhi-Patna, Delhi-Pune, Mumbai-Jaipur, Mumbai-Cochin, Mumbai-Chandigarh and Delhi-Goa.

Again, if an airline earns 100 credits from city routes, it will need to earn 30 from remote routes. Airlines will also have to deploy at least three per cent of their capacity on city routes in intra-remote areas.

The present policy requires 10 per cent of an airline's capacity on certain routes to be deployed on routes identified as remote areas and 1 per cent in intra-remote areas.

"The objective of the policy is to encourage airlines to operate in remote and regional areas by offering concessions and at the same time making it obligatory to fly to remote and intra-areas," the ministry's draft proposal states. The credits earned on remote routes will be multiplied by three and those on intra-remote area routes by five.