Indian Government Asked to Keep the 5/20 Rule
Sunday, 25th January 2015 at 01:54am
The existing 5/20 rule in the country's aviation law refers to the 5 years of domestic operation and a fleet of 20 aircraft that a local airline has to comply before it can be permitted to operate international flights out of India.
The lobby group, is a coalition of older and more established airlines, has been asking the government not to be lenient towards new players.
Existing local airlines have been opposing the entry of new airlines which will potentially bite into their share of the pie. Among the newest airlines which recently got their permits to operate are Vistara and AirAsia India, both of which are partly owned by Tata Sons, India's largest business conglomerate.
Tata Sons has partnered with low-cost giant AirAsia Bhd. of Malaysia to set up a local subsidiary in early 2013 and founded AirAsia India. It commenced operations in June last year.
The holding company of the Tata Group also formed a joint venture with Singapore Airlines in October 2013 to found Vistara, a full-service airline. It launched commercial operations on January 9 this year.
India's more established airlines have never been shy about their opposition against newcomers for obvious reasons. They even formed a coalition to show their resistance against the new players and succeeded in filing a case against AirAsia India, citing violation of the existing aviation law that was amended during the height of the country's aviation crisis in 2012.
Vistara and AirAsia India, through their common part-owner, denied any commission of violations in the joint venture with its respective foreign partners, Singapore Airlines and AirAsia Bhd.
The coalition consists of IndiGo, GoAir, Jet Airways, and SpiceJets, which control 80% of the domestic market. The rest is shared by Air India and newcomers, AirAsia India and Vistara.
Tony Fernandes has been advocating for a more liberalized aviation industry in India and proposed to the government to abolish the 5/20 rule which he called 'ridiculous' as it prohibits the country's aviation industry to develop.
The consulting firm, CAPA, also supports the abolition of the 5/20 rule and the government should look for another way to regulate its aviation industry.
By: Pete Lee.