The Indian government is planning to scrap the rules for airlines requiring five years of domestic operations and a fleet
of 20 aircraft before launching overseas operations.
Even new airlines will be allowed to fly abroad after the 5/20 rule is done away with. The proposal comes at a time when Tata Sons Ltd and Singapore Airlines have proposed to start a full service carrier, and Tata Sons teamed up with AirAsia Bhd to start a low-cost carrier.
“I personally believe there is no logic in this rule and we are preparing a cabinet note to scrap this rule after consultation with the Directorate General of Civil Aviation (DGCA). We are looking at making this happen by November end. There could be some technical consultation that the ministry requires to scrap this rule, but we are moving ahead with this decision” Ajit Singh, India’s Civil Aviation Minister was quoted by The Mint.
If the 5/20 rule is scrapped, it will be the second big move to open up the aviation industry since September 2012, when the government allowed foreign airlines to invest up to 49% in domestic carriers.
The Centre for Asia Pacific Aviation (CAPA) is of the opinion that the 5/20 rule has been one of the most damaging and discriminatory regulations in India. “This regulation has enabled foreign airlines to capture a larger share of the international market at the expense of home carriers. The financials of several Indian carriers would likely have been stronger if they had been allowed to launch international routes as this would have reduced excess capacity in the domestic market and improved aircraft utilisation,” CAPA was quoted by the newspaper.