The 5/20 rule is almost 10 years old and the airline scene in the country has undergone enormous change. Revised rules are on the anvil!
The Federation of Indian Airlines (FIA), formed some eight years ago in 2006, had Air India, Jet Airways, IndiGo Air, SpiceJet and Go Air as its members. It recently, lost its founder-member in Air India. The Federation had resisted the issue of licences to Air Asia and Tata SIA by protests to the Director General of Civil Aviation (DGCA). And when the issue of 5/20 rule was talked about, they made a hue and cry that this should not be waived and that all new airlines must complete five years of domestic service before being allowed to fly on international routes, provided they have a fleet of 20 aircraft, "as per rules" in force.
That was the rule then. Now it might change. Civil Aviation Minister Ashok Gajapathi Raju has not succumbed to this pressure by the Federation and had stated that 5/20 rule does not exist in any country across the world!
Now the Associated Chambers of Commerce and Industry of India (Assocham) has released a white paper, which says "there is no logic in the policy (rule) of government that required airlines to operate local service for five years and have a fleet of 20 aircraft before being allowed to fly to foreign destinations".
The 5/20 rule is almost 10 years old and the airline scene in the country has undergone enormous change. A few more airlines have joined the scene to make air travel economic through competitive fares, though most of them, except for IndiGo Air, are at a loss. Air Asia had shown initial profits in most sectors, however, their just announced quarterly accounts show a loss.
It may be recalled that both Air Asia and Vistara (Tata SIA Airlines) had attempted to join the Federation of Indian Airlines but had not received any response. But with the exit of Air India, a founding member of FIA, the Federation may have to rethink on its membership policy as new entrants like Air Costa and Zav Airlines may watch the situation before deciding their course of action.
Who knows as to whether these new airlines may be forced to form an association of their own unless the Federation comes to its senses and takes a realistic approach to make a unified stand in dealing with DGCA and the Civil Aviation Ministry.
Due to the fall in international oil prices, ATF (jet fuel) rate has gone down by 7.3%.
There is a fair chance that this may go down further, should the oil prices continue to fall.
Recently, there have been unconfirmed market rumours about SpiceJet being in the process of obtaining a foreign partner and that due to serious restructuring they were also reducing some flights in some sectors. It enjoys 17.3% of the Indian market share.
The white paper released by the Assocham also suggests that it may be good idea to have Air India going public and obtaining a foreign partner.
Ashok Gajapathi Raju, the Civil Aviation Minister is also not averse to the idea of going public in other areas as well, such as the operations of Airport Authority of India (AAI), chopper service of Pawan Hans Helicoper service besides Air India, and listing the shares in the stock exchange.
These changes are bound to make a huge difference to the civil aviation scene.
(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.)
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