Experts hail new aviation policy despite ‘compromise’ on 5/20

Experts hail new aviation policy despite ‘compromise’ on 5/20

By ANANDO BHAKTO | NEW DELHI | 18 June, 2016
Former Air India executive director Jitendra Bhargava
The main feature of the new aviation policy is with regard to bilateral rights for international routes in which the concept of open skies has been introduced for SAARC countries and countries beyond 5,000 km from Delhi on reciprocal basis.

Aviation experts have hailed the Centre’s decision to do away with the 5/20 rider that barred many India based airlines from overseas operations. They have welcomed the new aviation policy, which focuses on increased competition and more investment and connectivity, and have said that the UPA government’s 5/20 directive in 2004 was an “unprecedented decision” and was “without rationale”, envisaged primarily to stifle competition to Jet Airways, which, at that point of time, was the only domestic airline flying internationally, besides government funded Air India. As per the 5/20 rule, India based airlines were not eligible to fly on global routes unless there were 20 carriers in their fleet and they had at least five years of flying experience.

“There was no rationale then. This was an unprecedented decision which does not exist anywhere in any country. It was done solely with the intention of benefiting Jet Airways, so that other carriers like Sahara etc., did not fly abroad,” alleged former Air India executive director Jitendra Bhargava, while speaking to The Sunday Guardian. The National Democratic Alliance government on Wednesday announced an overhaul of the aviation sector, and scrapped the five-year criteria. The 5/20 rule, thus, stands amended to 0/20, although aviation experts feel that no private airline can go international at the very outset as it will take them time to acquire the required number of 20 aircraft.

Alluding to the stiff resistance offered by the Federation of Indian Airlines which represents Jet Airways, GoAir, SpiceJet and IndiGo (all of which fly both domestically and internationally), Bhargava said the Central government got “swayed by pressure” and agreed on a “compromise formula” instead of fully revoking the 5/20 stipulation, as had been demanded by AirAsia India and Vistara. “If you go by the simple philosophy of what the Prime Minister preaches—India first—then take decisions which are in the best interest of the country. Don’t get swayed by pressure of this side and that side,” Bhargava said, adding the Centre took a “middle path” so that the new aviation policy does not get delayed.

The sentiment was also reflected by CEO of Vistara, Phee Teik Yeoh, who told the media, “We would have preferred, of course, that the 5/20 rule be completely abolished to ensure that Indian aviation achieves its full potential.”

Sanat Kaul, chairman at International Foundation for Aviation, Aerospace & Development, hailed the regional connectivity scheme (RCS) spelled out by the National Civil Aviation Policy, asserting that this will lead to economic development of remote regions through industrial growth and tourism. “RCS will be the basis of an aviation infrastructure for the country. This involves keeping ticket price for regional aviation of one hour flight at Rs 2,500 for unserved airports under RCS. Along with this is the opening of about 50 remote unserved airports. In order to meet the likely loss due to fixing of ticket price for remote connectivity, it has been proposed that a viability gap funding (VGF) will be provided by a small levy per departure on all major domestic routes. This will go a long way in making RCS at unserved airports viable,” Kaul told this newspaper. Many developed countries like the United States, Canada and Finland already have such schemes.

Kaul further said that by including Uttarakhand and Himachal Pradesh in the Route Dispersal Guidelines, the Centre will enable them to get the incentive they deserve as “aviation is a catalyst to growth”. The RDG was earlier applicable to the Northeast, Jammu and Kashmir and the island territories. But Bhargava countered that the RDG is uncalled for. “It is not a desirable thing for the government to tell anybody how to run a business. Airlines should be allowed to run their business the way they want to because they are concerned about their profitability also. If they make losses, government does not come up with subsidies,” the author of The Descent of Air India argued.

The other main feature of the new aviation policy is with regard to bilateral rights for international routes in which the concept of open skies has been introduced for SAARC countries and countries beyond 5,000 km from Delhi on reciprocal basis. Kaul said this will check the imbalance that worked to the disadvantage of domestic airlines during the erstwhile UPA II government, by ensuring that the Gulf countries and Singapore are kept out while opening the skies internationally. “This is necessary as far too many flying rights were given to the Gulf at the detriment of our airlines during UPA II, while also retaining the policy of 5/20. This imbalance has been corrected in this policy with the hope that one or two of our airports could become an international hub like Dubai or Singapore. This is a good policy as it will give a major boost to inbound tourism along with improved visa policies,” Kaul said.

The government has said that the new policy will boost domestic passenger traffic nearly four-fold to 300 million by 2022. Experts have also said that the policy is likely to attract more investment to India as it clears the ambiguities and uncertainties in the future path of aviation in India. Bhargava summed up: “In totality, the policy is a good one. A much needed policy and one should welcome it.”


* 0/20 replaces 5/20: Airlines will need 20 aircraft, but not five years of local operations before flying globally.
* 22 areas will be covered under Regional Connectivity Scheme (RCS).
* Fares under RCS will be Rs 2,500 or less; viability gap funding will support airlines.
* Himachal Pradesh and Uttarakhand added to destinations under Route Dispersal Guidelines.
* Mutually open skies introduced for SAARC countries and countries beyond 5,000 km from Delhi.

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