Removal of 5/20 norm would lead to higher airfares: warns FIA

Coming out strongly against Ratan Tata's pitch to scrap 5/20 norm for airlines, the grouping of four established carriers FIA today said removal of the rule would lead to higher airfares and result in "reverse discrimination".
In a united voice, the top honchos of SpiceJet, IndiGo, GoAir and Jet Airways under the umbrella of Federation of Indian Airlines (FIA) asserted that 5/20 rule is not protectionist.
FIA's remarks comes days after Tata Group Chairman Emeritus Ratan Tata publicly hit out at older carriers accusing them of lobbying and using "monopolistic pressures" to retain preferential treatment under the controversial 5/20 rule that bars overseas flying by new airlines.

Upping the ante against the proposal to allow start up carriers to fly overseas without complying with 5/20 norm, FIA warned that doing away with the norm would push airfares higher.
"If the 5/20 norm is removed, domestic fares will go up as airlines will deploy capacity (aircraft) on international routes which will also create more overseas hubs," IndiGo President Aditya Ghosh said.
Along with SpiceJet's CMD Ajay Singh and senior executives of Jet Airways and GoAir, Ghosh emphasised that level playing field should be ensured for all domestic airlines.

Under 5/20 rule, only local airlines having five years of domestic operations and at least a fleet of 20 aircraft can fly overseas. This makes the two Tata group-invested airlines -- AirAsia India and Vistara -- ineligible for international operations.

Apparently rebutting Tata's assertion that 5/20 norm is protectionist, Ghosh said that if the government wanted to remove the rule then the existing route dispersal guidelines (RDGs) too should be done away with.
Under RDGs, local carriers are compulsorily required to operate flights to certain regional and remote areas such as the North East region.
"It (5/20 rule) is not protectionist. Rather removal of 5/20 without the simultaneous removal of RDGs would be reverse discrimination," the IndiGo chief said.
The 5/20 norm and RDGs should be seen in conjunction and not in isolation, Ghosh noted.
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Ajay Singh claimed that the Civil Aviation Ministry was going ahead with finalisation of the new policy without providing an opportunity to FIA to present its views, including on 5/20 norm.

FIA members account for more than 90 per cent of the domestic airline industry.
The Ministry was not giving FIA a "hearing" on the draft policy before giving it a final shape, Singh claimed.
The draft policy, unveiled on October 30, 2015, was kept for comments from stakeholders for over a month. Besides, the Ministry has also held meetings with airport operators, airlines and other stakeholders.
On Tata's comments that older airlines were lobbying to retain the rule allowing overseas flights by Indian carriers, Union Minister Mahesh Sharma had yesterday said the government would take a call on such issues at the right time.

"As an Indian citizen, he (Ratan Tata) has given a suggestion. We welcome his suggestion. We will try to take a call on his suggestion.
"We as a government are here to address and take call on such issues which come from various stakeholders and well wishers. The government will have take a call at the right time," the Minister of State for Civil Aviation had said.
On Sunday, Ratan Tata had said that established carriers were using "monopolistic pressures" to retain "preferential treatment" under the 5/20 rule.
"The lobbying for discriminating policies between old and new airlines is reminiscent of protectionist and monopolistic pressures by vested interests' entities who seem to fear competition, as in a variety of other sectors over the years," Tata had said in a message posted on his Twitter.

"One hopes when the new policy is introduced it will be free of discrimination and protectionism, so that Indian aviation can grow for the benefit of consumer and the common man -- not to serve the interests of select beneficiaries of protectionism," he had said.