Industry

Centre may cut 5 in 5/20 airline rule

The government may allow domestic airlines with 20 aircraft to fly international routes and lift a restriction of five years of local operations.

The new norms are part of the civil aviation policy that is likely to be taken up by the Union Cabinet soon. While the five-year restrictions could be lifted, domestic carriers may still be required to comply with the present fleet norms of having at least twenty planes, senior civil aviation ministry officials said. They would also be required to deploy at least 20 per cent of their total aircraft capacity on domestic sectors in order to secure international flight permits.

As per the present 5/20 rule, airlines in India are permitted to fly abroad only if it has five years of domestic flying experience and at least 20 aircraft in its fleet. The draft civil aviation policy, released in October last year, had proposed three options – keeping the rule, doing away with it or replacing it with a credit-based system. The aviation companies are divided over this rule and the lack of consensus is partly responsible for delays in rolling out the new aviation policy.

Indigo, Jet Airways

The incumbent private airlines that are allowed to fly abroad — IndiGo, Jet Airways and SpiceJet — have all opposed the proposal to abolish the rule as it would dent their market share and yield an unfair advantage for new players who won't have to wait to start global operations. Vistara and AirAsia, on the other hand, are in favour of scrapping the 12 year-old rule, which restricts them to fly to international airports from India.

“The proposal to replace the 5/20 norms with a ‘20/20 rule’ appears to be a compromise between logic, global precedence and domestic compulsions,” said Amber Dubey, partner and India head of aerospace and defence at KPMG. “Though sub-optimal, it is perhaps a practical move to break the stalemate that has held back the release of the NCAP 2016, which has wide ranging reforms far beyond just the 5/20 issue.”

While Vistara, a joint venture of Tata Sons and Singapore Airlines (SIA), recently inducted its tenth plane into operations, AirAsia India, owned by Tata Sons and AirAsia Bhd, flies six planes on domestic routes as of now.

12-15 months

Both the airlines may take around 12-15 months after the release of the civil aviation policy to induct 20 aircraft to be able to fly on international routes, Mr. Dubey said.

Ministry sources said the airlines may have to deploy 20 per cent of the total number of seats that they fly on domestic routes.

“The revised rule of ‘20 aircraft and 20 percent ASKM in the market’ defies the logic of identifying an airline’s financially sustainability and ability of operating international flights,” said Mark D Martin, founder and chief executive of Martin Consulting, an aviation consulting firm.

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Printable version | Aug 13, 2020 3:47:30 AM | https://www.thehindu.com/business/Industry/centre-may-cut-5-in-520-airline-rule/article8581569.ece

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