The government may looking at easing norms for domestic airlines to operate international services without restrictions in fleet size and operational experience ahead of the launch of two start-up ventures - Tata-SIA Airlines and Tata-AirAsia.
Existing rules require Indian carriers to be in operation for at least five years and have a fleet of 20 aircraft to be eligible to fly on international routes.
Civil Aviation Minister Ajit Singh today said the ministry is in the process of framing a cabinet note to seek the government’s approval to “scrap” the regulations within the coming month and ease norms for flying international.
“The 5/20 norm for flying international will be completely abolished. We are preparing a cabinet note on the issue. Since everything needs to be completed before February end (when the election code of conduct comes into force), we will do it before that”, Singh informed.
Singh’s proposal has already been endorsed by Finance Minister P Chidambaram, who said in Washington in October last year that if the civil aviation ministry moves a Cabinet note to amend the rules, he would support it.
The move will benefit Tata-SIA and AirAsia, both of whom are expected to take to skies in 2014. GoAir too stands to be a beneficiary from the abolition of the regulation as it would help the airline in improving fleet utilization.
Tata Sons, which tied the knot with Singapore Airline (SIA) to launch a full-service carrier in India with an initial investment of $100 million on September 19 last year, has said it would like to operate international flights from India depending on government approvals.
Tata Sons’ other joint venture partner, AirAsia chief Tony Fernandes, too, has been vocal in his criticism of the 5/20 rule. In a media briefing in New Delhi in July2013, Fernandes had said the rule makes no sense and that India is the only country where such a rule exists. “A one-plane operation like AirAsia Malaysia can fly into India, but an airline with (less than) 20 planes cannot fly out. That's a disadvantage to the (Indian) airline.”
AirAsia has evinced interest in developing India as a hub for international travel.
“India is strategically located. And we can operate flights from the southern part of the country within a four-hour circle to destinations in Africa and on the Gulf route such as Doha, Nairobi, Maldives, Karachi, Bangladesh and some cities in China. It is bizarre that the government has a regulation in place, which allows (only) airlines with five years of operations and a fleet of 20 aircraft to fly international. It does not make sense. Probably Naresh (Goyal) or someone put it down,” Fernandes had said.
Aviation advisory firm Centre for Asia pacific Aviation (CAPA) in a recent report described the 5/20 rule as “the most damaging and discriminatory”. According to CAPA, the financial health of Indian airlines would have been much stronger had they been allowed to commence international operations earlier. It would have improved domestic carriers’ aircraft utilisation and permitted them to compete aggressively with foreign airlines, which over the past few years have snared away international traffic.
GoAir CEO Giorgio de Roni had told Business Standard the airline is looking to fly international upon receiving regulatory approvals, “We already fly our aircraft 13.5 hours a day and, if we have to improve productivity, we need to fly in the night as well. The idea is to improve utilisation by flying on international routes. The Gulf is a possibility.” The airline would have a fleet of 19 aircraft by February 2014 and is looking at a waiver of the 5/20 rule to start overseas operations.
In addition to the abolition of the 5/20 rule, the ministry is also looking into a proposal to allow A380 planes to land in Indian airports. Singh said, "We have asked for comments from ground handling, immigration and security agencies. Because this is the infrastructure which will be affected because one plane will have up to 500-600 passengers at a time. We are awaiting their comments.”
A change could benefit carriers like Singapore Airlines, Emirates, Lufthansa and British Airways that operate A380s and fly to India. Kingfisher Airlines was the only Indian airline to have ordered five A380s but Airbus said on Monday that it has revoked the order. Kingfisher Airlines stopped operations in October 2012 after accumulating losses over several years.