Airline lobby succeeds: 5/20 rule may not be abolished entirely

Top officials in the Ministry of Civil Aviation said today a cabinet note suggesting abolition of the 5/20 rule has been ready but intense pressure from incumbent airlines is forcing the ministry to merely dilute this rule instead of totally abolishing it.

Sindhu Bhattacharya November 05, 2014 19:23:21 IST
Airline lobby succeeds: 5/20 rule may not be abolished entirely

New Delhi: Start up domestic airlines may soon be allowed to start international operations within a year of launch. As of now, they need to do five years of domestic operations and build a fleet of 20 aircraft before getting permission to fly abroad.

Top officials in the Ministry of Civil Aviation said today a cabinet note suggesting abolition of the 5/20 rule has been ready but intense pressure from incumbent airlines is forcing the ministry to merely dilute this rule instead of totally abolishing it.

Airline lobby succeeds 520 rule may not be abolished entirely

Tweaking the 5/20 rule. Reuters

Air India, IndiGo, GoAir, Spicejet and Jet Airways are all vehemently opposed to the 5/20 restriction being lifted. Whether it is lifted entirely or merely diluted, startup airlines Vistara and AirAsia India will benefit. Vistara can then hook up with partner Singapore Airlines while AirAsia can feed into Malaysian parent AirAsia Bhd's network.

The 5/20 rule has been in force for almost a decade and it requires all startup airlines to wait for five years besides having a fleet of 20 aircraft before being permitted to fly overseas.

"All incumbents say if 5/20 is lifted, it will virtually kill them. They take the example of Singapore Airlines, which has enough capacity and pricing power to take away substantial international traffic from India. They want the 5/20 rule to be diluted, not abolished," one official said.

He said one option being discussed is capping restriction to one year and five aircraft. Another official said it could be two or even three years. A decision is expected later this week.

The 5/20 rule was imposed by UPAI a decade back at the insistence of a powerful full service airline owner. And since then, it has harmed Indian aviation's international growth - specially since startup airlines from other countries continue operations here.

One of the officials quoted above also said if incumbents' pleas on 5/20 are heeded, they will have to then agree to mount more domestic flights to remote areas.

"It must be a quid pro quo. If we are protecting their interests, they must help us improve domestic connectivity," the official said.

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