The battle for the skies has landed the Civil Aviation Ministry right in the middle of a tug-of-war. On one hand, newer airlines are pushing for quicker reforms and scrapping of old rules to allow them to expand and go international faster. On the other, older airlines have dug in their heels and are demanding a level playing field.
Pressure from different airline lobbies is pulling the new government in opposite directions over the 5/20 rule for domestic airlines. A powerful lobby of incumbent airlines wants the rule to stay while another comprising new entrants wants it to be scrapped. So what exactly is this rule all about? -The 5/20 rule mandates that every Indian airline must complete five years of domestic operations and must have a fleet of at least 20 aircraft before it is allowed to fly abroad. -If the rule is eased - immediate beneficiaries will be the two Tata airlines - AirAsia India and Tata-Singapore Airlines.
So what are the arguments in favour of this rule being scrapped? Experts say: - the rule makes Indian airlines anti-competitive. - the fleet size requirements incur a large start-up cost for domestic airlines which are already in a precarious financial state. At its end- Aviation consultancy CAPA says such a policy has enabled foreign airlines to capture a larger share of the international market at the expense of home carriers.
14/07/14 CNBC-TV18/moneycontrol.com
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Pressure from different airline lobbies is pulling the new government in opposite directions over the 5/20 rule for domestic airlines. A powerful lobby of incumbent airlines wants the rule to stay while another comprising new entrants wants it to be scrapped. So what exactly is this rule all about? -The 5/20 rule mandates that every Indian airline must complete five years of domestic operations and must have a fleet of at least 20 aircraft before it is allowed to fly abroad. -If the rule is eased - immediate beneficiaries will be the two Tata airlines - AirAsia India and Tata-Singapore Airlines.
So what are the arguments in favour of this rule being scrapped? Experts say: - the rule makes Indian airlines anti-competitive. - the fleet size requirements incur a large start-up cost for domestic airlines which are already in a precarious financial state. At its end- Aviation consultancy CAPA says such a policy has enabled foreign airlines to capture a larger share of the international market at the expense of home carriers.
14/07/14 CNBC-TV18/moneycontrol.com
