Civil aviation policy cleared: 0/20 rule is a clincher for Vistara, AirAsia India

New Delhi - The much-awaited national civil aviation policy that seeks to strengthen regional connectivity and tap the sector's high growth potential was on Wednesday cleared by the Union Cabinet.

Civil Aviation Minister Ashok Gajapathi Raju said the policy is a "game changer" and that the country's aviation sector is poised to become the world's third largest by 2022.

The policy has been finalised after nearly eight months since the Ministry came out with the revised draft in October 2015 and follows many rounds of deliberations with stakeholders. The NDA government had for the first time
unveiled the policy draft in November 2014.

Significantly, India's domestic air traffic market logged the fastest growth in the world for the 13th consecutive month in April. The market grew at nearly 22 per cent during the month.

 Civil aviation policy cleared: 0/20 rule is a clincher for Vistara, AirAsia India


"India's domestic traffic soared 21.8 per cent, marking the 20th month of double-digit traffic growth and the 13th consecutive month it has led the domestic markets," global airlines body, International Air Transport Association (IATA) had said last month.

Initially, the policy was expected to be finalised in the last financial year as certain proposals were to be in effect from April 1, 2016.

However, the government had been moving back and forth on the policy seeking to sort out the differences among stakeholders including on 5/20 norm.

The norm has been changed. As per the new guidelines, any airline with 20 aircraft or that keeps aside 20 percent of their fleet exclusively for domestic sectors can fly abroad. The five-year domestic flying experience has been revoked.

Hectic lobbying

The 5/20 rule that mandates that airlines need to fly at least 5 years domestically and should possess 20 aircraft has been a bone of contention among the new players and the old.

In the run-up to the framing of policy, this norm had witnessed extensive debate, with legacy carriers opposing any changes to the rule, while start-up airlines frantically demanding its scrapping.

Significantly, AirAsia Berhad --a key stakeholder in AirAsia India had recently said that it was confident of the Government scrapping the norm.

"...the ruling (5/20 norm) is expected to be revoked along with a new National Civil Aviation Policy (NCAP) to be introduced in the near future, given massive lobbying against it," AirAsia Berhad said in its 2015 annual report released yesterday.

In February, Tata Group Chairman Emeritus Ratan Tata had accused older carriers of lobbying and using "monopolistic pressures" to retain preferential treatment under the 5/20 rule.

Under this norm, AirAsia India and Vistara--both operated by the Tatas through joint ventures--are ineligible to fly overseas.

Meanwhile, the incumbent airlines had alleged that the ministry of civil aviation has not heard them out.

However, the minister denied all such allegations in an interview with the Economic Times.

"I think that is uncharitable (to say) and it's my personal opinion. Let me tell you that I have never denied any permission to people who want to meet me. I have always invited people and heard them out," he said.

With PTI

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Updated Date: Jun 15, 2016 18:47:18 IST