The 5/20 rule has been in debate since a decade and India is at the receiving end of a lot of criticism over it in the last few years. The rule dictates that any airline must have a minimum domestic operations’ tenure of five years and a fleet of 20 aircraft to be eligible to commence international operations. This rule has been followed diligently, and with little complaint, by every airline that has soared (and in some cases, sunk) over time.
However, the newfound interest the private sector as well as the government has shown in boosting tourism to increase revenue through foreign exchange has put this rule under scrutiny. Why wait five years? Why insist on a certain fleet size? Why can’t a relatively younger airline with a smaller fleet of, say, 10 aircraft, be trusted to conduct international operations than its seniors? It would only lead to more tourism exchange on the airline’s routes.
The argument has brought several members of the travel community to argue against the archaic rule, and the government has been dropping hints about their plans to do away with it. However, older airlines have been opposing the scrapping of the 5/20 rule. It could be seen as the bully syndrome – insisting on doling out to others what was once doled out to them. Speaking with T3 on the sidelines of the CAPA India Aviation Summit earlier this year, S. Venkat, Director – Finance, Air India had said that the rule has been in existence for years, with every airline so far having followed it; so the newer ones should too.
Biji Eapen, President, IATA Agents Association of India (IAAI) slammed the rule as discriminatory and unhealthy to the aviation industry in India. “Many foreign airlines took advantage of this facility and operated to India even with a one-aircraft fleet. RAK Air Services started with a single aircraft. Later, other carriers, especially from the Gulf countries followed suit. In other words, any airline registered abroad with a one-aircraft fleet can fly into India immediately upon its registration. Interestingly, on many occasions, these carriers had cancelled their operations due to technical reasons and/or non-availability of aircrafts,” he argued.
While lauding the Indian government’s vision of bringing India on the world map as a preferred transit and hub destination for international traffic movement, Phee Teik Yeoh, CEO, Vistara opined that, if the government wants to catapult Indian aviation onto the global platform, the 5/20 rule must go away. According to him, Indian carriers have not been able to fully utilise their bilateral flying rights for overseas destinations, a fact which refrains growth for both the industry and the economy. Gulf-based carriers have fully used their bilateral agreements with India by operating multiple flights and providing connections to over 140 global destinations. Conversely, Indian operators have underutilised their bilateral rights and the leading Indian carriers fly to less than 35 global destinations. These facts indicate the vast reservoir of potential in the Indian aviation sector which is lying untapped, he stated.
“Once the 5/20 issue is ironed out India can be showcased globally as an attractive tourism and investment destination. Aviation is a key engine for the socio-economic growth of the country and harnessing the untapped potential of the Indian aviation market will immensely benefit the economy, boost tourism, generate employment opportunities and ultimately benefit the customer too,” he said.
Eapen suggested that the country first look at the economical losses being incurred due to these bad policies and remove these kinds of barriers. India must allow carriers to operate internationally, but, with specific regulations to operate as a hub linked with network connectivity to tier II and III cities, he said.
“Industry issues need to be addressed immediately by reducing the cost of ATF, rationalisation of taxes, reducing cost of operations, Hub concept, and removal of 5/20 rule for domestic airlines to fly international. We need to make air travel conducive and accessible to more number of people. With increasing purchasing power of the middle class, there is a healthy shift in consumption patterns as well. As more people travel, the entire industry gains momentum. An enabling environment is required where market forces are allowed to prevail, unhindered by restrictive rules and policies, which will eventually create ideal conditions for the sector to flourish and facilitate economic prosperity as well,” Yeoh said.
Eapen and Yeoh were both optimistic of the government doing away with the 5/20 rule in the near future. Eapen added that DGCA must conduct regular audits and checks on the professionalism and service quality of all those airlines.
