Ratan Tata vs Ajay Singh: All you need to know about 5/20 rule in aviation

Govt likely to remove the 5/20 rule even as the industry is divided in to two camps over the issue

The aviation industry is divided in to two camps over a proposed reform in the draft civil aviation policy. The policy which aims to liberalise Indian skies has mooted the removal of the 5/20 rule. 

Here is all you wanted to know about the 5/20 rule:

1) What is 5/20 rule?

5/20 rule refers to a regulation which binds Indian airlines to have five years experience of domestic operations and a fleet of 20 aircrafts in order become eligible to fly abroad.

2) Why such a rule?

There are two reasons why such a rule came into existence.

- In 2004, when the government allowed private airlines to fly abroad, there were apprehensions that private players will overlook the domestic sector and fly in the more lucrative overseas routes.

- This would have also proved detrimental for the interests of state-owned Indian Airlines and Air India (currently Air India) which was already facing pressure from private players like Jet Airways and Air Sahara in the domestic routes.

3) Why remove it now?

The present government is of the opinion such a rule is not in the interest of Indian aviation and is a hindrance in attracting business interest into the sector.

4) Who supports the abolition of the rule?

The new carriers- Vistara and Air Asia says that the rule should be abolished. Doing so will benefit the two airlines as they will be immediately eligible for flying abroad.

5) Who opposes it?

The incumbent airlines and major players like Indigo, Jet Airways, Spice Jet and Go Air opposes it. These airlines under the lobby group, Federation of Airlines (FIA) has threatened to drag the government to court if the rule is removed.

Reason: These players say that removing the rule suddenly is not fair to them as they have followed the rule flying in loss making routes bearing financial loss and abolishing it now will be a preferential treatment to the new airlines.

6) What is Air India’s stance?

The state owned airline which earlier opposed the abolition of rule has changed stance. While previously, the airline went to the extent of saying that removing the rule would be a death knell for the airline, it has dropped its opposition and has pushed the ball into the government’s court.

7) Who said what?

Ratan Tata, chairman-emeritus of Tata group: The lobbying for discriminating policies between old and new airline is reminiscent of the protectionist and monopolistic pressures by vested interests’ entities who seem to fear competition, as in a variety of other sectors over the years. These protectionist moves have held back progress in India compared to open economies that have thrived on competition overseas.

Ajay Singh, chairman, Spice Jet: What is wrong if these two foreign-controlled airlines are also asked to serve India before being allowed to fly international? Mr Tata, whom we respect greatly, should, in fact, urge these airlines in which his group is a shareholder, to serve India willingly before being allowed to fly international.