If and when the 5/20 rule is revised, the immediate advantage would go to GoAir, which has more than five years domestic flying experience and is currently short of one aircraft to meet the fleet requirement of 20
It was in 2004, the Cabinet had cleared the 5/20 rule for permitting the domestic carriers to fly to international destinations. It was felt, at that time, that adequate domestic experience in flying is necessary before the airlines became eligible to start international service. It must be remembered that, at that time, the Cabinet felt that the carrier must have a fleet of 20 aircraft and 5 years’ experience to handle international traffic.
Soon after the formation of the National Democratic Alliance (NDA) government, union Civil Aviation Minister, Ashok Gajapathi Raju had openly stated that India was the only country in the world that had such a stipulation. While foreign airlines had no such condition imposed on them for operating their service into India, domestic carriers had to follow the 5/20 rule. For more than one year now, the Minister has been working on various permutations and combinations to amend this rule, if not waive it altogether, in spite of stiff opposition from the members of Federation of Indian Aviation (FIA).
The FIA, it may be remembered, had opposed the abolishment of this rule, simply because it would give undue advantage to newcomers like Air Asia India, Vistara and other new entrants. The FIA had stated that their members had to comply with the 5/20 rule before they could serve oversea destinations and take advantage of the passenger traffic that was being taken by foreign airlines.
If and when this 5/20 rule is revised, the immediate advantage would go to GoAir, which has more than 5 years domestic flying experience and is currently short of one aircraft to meet the fleet requirement of 20. Other new airlines will have to wait for their turn. From the press reports, it appears, that the Civil Aviation Ministry has put up a proposal to the Cabinet for clearance, whereby this 5/20 rule may be amended to reduce the time frame to 2/12 years, instead of 5 years, and also eliminate the fleet requirement of 20 aircraft. It is felt that once the carrier is fully equipped and has regular annual safety audit there ought to be no problem for permitting them to go overseas. Other considerations like accident-free year and meeting of the guidelines for flying in India would make the carrier eligible for international flights.
In the meantime, there have been interesting developments in the air scene in the country. Thanks to the infusion of capital, and change in the management, SpiceJet is trying to return to normalcy, though, recently, it had to cancel flights. Air Kerala is still in the process of obtaining the required clearances that may permit it to start soon. Its plans to go international will have to wait for a couple of years, or more, to be able to cater to the large Keralite population in the Gulf. For the time being, it ought to be satisfied with servicing the expatriate population to reach two-tier towns and cities in Kerala.
As mentioned earlier, when the Cabinet clears the new proposal, revising the 5/20 rule, the advantage will go to GoAir, which along with IndiGo Air, are the only ones that are making profits in this business.
Press reports show that GoAir has carried over six million passengers in 2014, as against 5 million in 2013, showing a 20% growth, and operating with a fleet of 19 aircraft (all A 320s), covering 975 flights to 22 domestic destinations. Their 20th aircraft is expected only next year, but, with the anticipated revision in the 5/20 rule, they may take to the international sky sooner than expected. GoAir has been catering to the needs of passengers to North East, Jammu & Kashmir besides Andaman Islands also. It has plans to cover many other two-tier towns and cities and hopes to increase its fleet to 80 aircraft by 2020.
There are market speculations that some foreign airlines, from the Gulf, have shown interest in joint ventures with GoAir, who are not listed in the stock exchange like Jet Airways and SpiceJet. If and when they plan to take advantage of the overseas flights, and joint ventures by infusion of capital, there is a fair chance that an IPO may be one of the routes that they may adopt. As a profit making airline, it would be worth watching on its development plans.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.