Scrapping of 5/20 norm welcomed by airlines, analysts

National airlines and analysts have said that the new integrated civil aviation policy is a mixed bag but doing away with the 5/20 norm, where airlines have to operate on domestic routes for at least five years before they can start international operations, was perhaps the biggest gain for the local carriers.

The new norm, however, has kept one part of the 5/20 norm intact. A domestic airline should have a minimum of 20 aircraft before it can fly foreign routes.

According to Amber Dubey, partner and head of aerospace defence for global consultancy firm KPMG, it will take at least take three years for a carrier to acquire 20 aircraft. AirAsiaIndia, an airline based in Bengaluru, said it will now start adding more aircraft from its current fleet strength of six so that it can start flying international routes.

AirAsiaIndia was one of the strongest critics of 5/20 rule as it wanted to seamlessly integrate its operations with AirAsia Berhad to fly to the far eastern countries. It will now be able to do so if it is able to quickly increase its fleet strength.

Amar Abrol, the CEO of the airline, said the new policy gives the airline clear direction to ramp up their operations in India.

“Though a 0/0 or 0/10 would have been more than welcome, the amendments that have been made to the policy are encouraging. The policy will help us to grow our business in the domestic segment before we scale up our operations to fly international.”

Phee Teik Yoeh, CEO of Tata Sons-Singapore Airlines JV airline, Vistara, said he would have preferred if the 5/20 rule had been completely abolished to ensure that Indian aviation achieves its full potential.

“As an Indian airline, we are committed to our expansion plans in India and are now looking forward to providing connectivity to travellers to and from India,” he said hinting at the possibility of flying international sooner than expected.

SpiceJet, Jet Airways and IndiGo refrained to comment as they are believed to have lobbied against the removal of 5/20 norm. They already fly on international routes.

Analysts with global consultancy firms were quite positive about the new policy stating that the government has finally come out with a clear direction.

“The Ministry has now consolidated its policies and intended actions on various sub-sectors providing directional guidance to the industry. It has sought to provide a fillip to the sector through putting in place a mechanism for providing transparent viability gap funding for regional connectivity, as well as proposing measures for a segment like MRO,” said Deloitte India’s partner Peeyush Naidu.

KPMG’s Dubey was more forthright and said the new policy’s focus is on affordability, connectivity and ease of doing business. He lauded the efforts of Aviation Secretary RN Choubey in putting together the framework.

“Bringing all stakeholders together, many of whom have conflicting interests is an herculean task – one of the reasons why we have never had an integrated aviation policy since 1947 despite many sincere attempts in the past.”

He pointed out that the making of the first ever integrated aviation policy was tough. He said the road ahead will be tougher as we go for its implementation in letter and spirit.

“If the government, industry and end-users work together keeping India’s national interest in mind, there’s no reason why India can’t achieve its vision of becoming the third largest aviation market by 2020 and the largest by 2030.”