Private carriers oppose relaxation of 5/20 rule

Resist suggestion for credit-based norms

The Federation of Indian Airlines (FIA) has reiterated its opposition to a relaxing of the '5/20' rule on plying abroad. The rule says no airline may apply to ply abroad without at least 20 aircraft and five years of plying within India. Existing airlines that also ply abroad, all of which had to abide by it, want no relaxation. For, it would enable their new competitors, AirAsia India and Vistara, to start international services without fulfilling either condition.

The civil aviation ministry has proposed to link a relaxation of the 5/20 rule with a new 'credit-based' policy. Airlines will gain credits on the basis of capacity deployment.
 

The association represents private carriers and has opposed the new proposal. Route dispersal guidelines stipulate capacity deployment in remote and unconnected areas. The proposal says airlines will need 300 credits to fly to destinations more than six hours away and 600 credits to destinations closer home. Airlines that start flying abroad will have to maintain a minimum of 200 credits every year.

The new airlines want scrapping of the 5/20 rule. To which, says FIA's associate director, Ujjwal Dey, in a letter to the aviation ministry: "It is apparent that removal of 5/20 policy is likely to serve the commercial interests of two new entrants, to the detriment of all incumbent airlines...At the same time, the proposal to amend the route dispersal guidelines significantly increases the deployment required in category II/IIA routes (flights to and within the northeast, Jammu & Kashmir and Lakshadweep), without any scientific basis or proof that these areas remain under-connected."

The airlines body has suggested a viability gap funding model to support airlines linking remote areas and continue with the existing route dispersal guidelines. According to FIA, under the official proposal, the new airlines will be able to start operating on the more lucrative international routes while operating with only three or four aircraft on profitable domestic trunk routes, and only two aircraft on remote area routes. Whereas existing airlines will use about 300 aircraft on domestic routes.

"Our submission to the government is to allow the market forces to prevail, unhindered by restrictive rules and policies, to beget an ideal condition both for the aviation sector and individual flyers. We have requested the government to reduce the cost of operations and appealed for simplified processes," said Phee Teik Yeoh, chief executive, Vistara.