On Monday, media reports said Air India had done a U-turn on its stance on the 5/20 rule, which says an Indian private carrier should operate on domestic routes for five years and must have 20 aircraft in its fleet before it can fly on international routes. No other country has such a rule. The reason AI’s flip-flop is news is that our aviation policy appears to be driven by what one player or the other wants, rather than what the market needs or consumers want. The 5/20 rule is a good example. New airlines such as Vistara and Air Asia India obviously want this rule to go. Older incumbents such as Jet, Indigo and SpiceJet have vehemently opposed abolishing this rule as they fear their market will get hit. Government-owned Air India till now was ranged on the side of the older private carriers but has now inexplicably changed its stance. The Centre’s draft civil aviation policy circulated in December 2015 proposed replacing the 5/20 rule with a domestic flying credits formula. But it left the issue open, setting the stage for furious lobbying by various airlines and industry associations.
Interestingly, others besides AI have done a U-turn. For instance, Assocham in September 2015 argued for the removal of the 5/20 rule calling it “irrelevant and anti-competitive”. But in December 2015, it submitted to the civil aviation ministry that the existing level playing field must be maintained for incumbent carriers vis-à-vis new entrants by retaining the 5/20 rule.
The 5/20 rule appears bizarre. An estimated 70 per cent of the 16 million Indians travelling abroad today use foreign carriers. Also, foreign carriers have never had any such restrictions. A brand new foreign carrier with barely five aircraft can easily operate in Indian skies, while 75 per cent of India’s bilateral landing rights go unutilised since some domestic players wanting to fly abroad are prevented by the 5/20 rule. Restrictive policies like this only result in airlines raising their fares to stay afloat. This makes flying prohibitive for the masses.
(Editorial Consultant)