The 5/20 rule, which permits only airlines with five years of experience and 20 aircraft to fly overseas, has always divided the domestic airline industry.
This time, it has pitted Tata's two airline ventures – AirAsia India and the yet-to-be- launched full-service carrier Vistara – and other new entrants into the sector against incumbent carriers.
On Monday, civil aviation minister Ashok Gajapathi Raju hinted at reversing the rule, introduced by the previous National Democratic Alliance (NDA) government in 1999.
"No other country has this rule. It is an opaque rule. We interacted with airlines. Some want it, some do not want it. What is the government's interest? It is what people want, which is to enhance regional connectivity. We are tying our hands (with this rule). We want to remove the fetters," Raju said.
"(The rule) has to be scrapped in view of the policy we will make. We want to encourage (flying on) regional routes. Flying abroad or not is up to them (airlines)," he said.
According to industry insiders, most established player like IndiGo, SpiceJet, Jet, Air India and Go Air are against the scrapping of the rule.
Those who will benefit from the new rule will be AirAsia India, a Tata-AirAsia joint venture, and Vistara, Tata's airline venture with Singapore Airlines.
It would also facilitate airlines which have queued up to join the domestic airline industry. They include Ligare Aviation, Quickjet Cargo Airlines, LEPL Projects, Air Pegasus, Air Carnival and Zav Airways.
An industry insider said, some years back, some airlines aggressively tried to get the rule scrapped, but nothing happened. "Every policy is influenced by a powerful lobby. These people (Tatas, AirAsia and Singapore Airlines) are using their clout," he said.
Kapil Kaul, chief of the Centre for Asia Pacific Aviation's (CAPA) South Asian region, also favours doing away with the rule.
"The 5/20 rule was the most negative policy action by the government. This rule makes no sense and should be immediately scrapped," he said.
Raju's argument is that it will help India use up its quota of bilaterals allocated under the Air Service Agreement (ASA).
Bilaterals refer to exchange of airline seats between two countries. India has signed pacts with more than 100 countries and has over 8 lakh seats available on international air routes every week.
Interestingly, Indian airline operators only utilise less than 50% of the quota, while foreign carriers use up almost their full quota. With the 5/20 rule gone, more airlines would be able to offer seats on overseas routes.
In what could facilitate disinvestment of the state-owned Airports Authority of India (AAI) and Pawan Hans, the government, in its draft civil aviation policy, said the two would soon be listed on stock exchanges.
One of proposals mentions that AAI and the government's helicopter company "will be corporatised followed by listing on the stock exchanges in order to improve efficiency and transparency."
A senior civil aviation ministry official said as per rules the "minor share (of an organisation) needs to be offloaded on the exchanges before disinvestment."
He said the government had already begun the process of listing the two companies on local exchanges.
"It will take a minimum of six months," he said. The government will have to hive off the Air Traffic Control services from AAI before it comes out with its IPO.
The ministry is also considering all options to improve the performance of Air India, including privatisation. Though Raju said privatisation may not happen immediately, he did not rule it out entirely.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}